Culture News

Tempe Wants a New Arts Tax — Here's Why That's a Problem

Heading towards the entrance for Tempe Center for the Arts.
Heading towards the entrance for Tempe Center for the Arts. Lynn Trimble

Editor's note: This story has been updated with several corrections, to reflect that the new art tax may cover TCA expenses.

Tempe has taxed citizens for nearly 20 years to pay for Tempe Center for the Arts. But soon, the center will barely have enough money for basic operations.

The arts tax expires in 2020, and the city hasn’t done nearly enough to assure the center’s long-term success without it. Instead, they’re asking voters to approve another arts tax. Even with that tax, though, there’s no guarantee the center will have sufficient funding – or effective leadership.

Often dubbed TCA, the center includes a 600-seat proscenium theater, 200-seat studio theater, 3,500-square-foot art gallery, and multipurpose room – all set within a 17-acre park adjacent to Tempe Town Lake.

It's an impressive-looking facility, but instead of showcasing the arts as intended, running out of money means the city may have to resort to renting it out to corporations for events. If Tempe voters approve the tax this November, the city says the TCA will still need "long-term assistance" to help it become financially viable.

The roots of the problem begin long before the TCA opened in 2007.

Back in the late 1990s, a small group of community members launched the drive to build TCA motivated in part by local groups having outgrown the Tempe Performing Arts Center at Mill Avenue and Sixth Street, and the fact that performances were scattered all over the city.

In October 1999, the city told the public that creating the center would cost between $26.7 million and $28.2 million. The city council approved putting Proposition 400 on the ballot in 2000, seeking voter approval for a dedicated arts tax. And they got it.

The proposition called for a one-tenth of 1 percent sales and use tax “to be used for land acquisition, design, construction, operations, and maintenance costs for a performing and visual arts center.” The center was built on city property, so there was no costly land purchase required.

Since city staff can’t advocate for or against propositions, volunteers formed the Tempe Cultural Enrichment Committee to promote Proposition 400. The group created materials to help community members understand the tax, including a Commonly Asked Questions sheet, which stated that the total cost to build the center would be $30 million. It also indicated that the 20-year tax would be temporary.

Most importantly, it mentioned an endowment meant to fund future TCA operations. “The tax will fund construction of the Center and endow its operation,” they wrote.

It’s a sentiment echoed in a November 2014 report, issued following an internal audit of TCA: “The initial intent was to assure that in 20 years (the life of the tax) there would be a reserve in place to support the operation and maintenance of the facility, without needing support from the City’s General Fund.”

The city projected a $20 million reserve, but the audit report predicts that won’t happen. Of course, most voters weren’t in the loop on all that fine print.

About one in four Tempe voters turned out for the general election in May 2000, and just over 53 percent approved the dedicated arts tax.

click to enlarge
Part of Tempe Center for the Arts, which includes two theaters and a gallery.
Lynn Trimble
For art supporters and city officials, it was good news. But there were challenges, too. Within three years, projected costs more than doubled. By April 2003, they rose to $63 million. In September 2003, Tempe’s city council approved spending $65.7 million for the center, which was designed by Tempe-based Architekton and Barton Myers Associates in L.A.

With interest and financing, the total cost of the TCA will be $84.5 million.

Basically, the city used one number before putting the art tax on the ballot, then doubled that figure after voters passed the tax.

Tempe broke ground on its new arts center in 2004. Complications soon followed.

Gail Fisher and her husband, Mel Kessler, were part of the small group that launched the drive to build TCA. They helped found The Friends of TCA, and they’ve been active ever since, helping with fundraising and other efforts.

“After the center was built, the city just sat on its hands,” Fisher said.

Officials held plenty of discussions about ways to raise more money, both before and after the center opened, which are recounted in city council meeting minutes. Suggestions included starting a business for the arts group and hiring a professional fundraiser. But officials never made it happen.

City leadership in the run-up to the TCA's construction included Mayor Neil Giuliano, whose term ended in 2004. He's currently the president and CEO of Greater Phoenix Leadership.

The financial plans to give the TCA a reliable funding stream were in place, Giuliano said in an interview this month. But they were tied to an organization called the Rio Salado Foundation, which broadened its scope to include Papago Park. That meant TCA was no longer a focus.

“My successors had a different vision,” Giuliano said.

Now, city staff members are sounding a new alarm. The nationwide economic downturn in 2008 left the city without needed TCA reserves and limited its fundraising capacity, according to a May 8, 2017, memo sent to Mayor Mark Mitchell and the city council.

The memo was written by Shelley Hearn, community services director for Tempe, and the deputy director of arts and culture, Ralph Remington. Remington also serves as producing artistic director for TCA. Their memo, reinforced during a city council presentation by TCA staff, warned that big changes were coming if a new arts tax wasn’t approved in 2020. TCA would eliminate all its own programming, and serve merely as a rental facility for cultural, corporate, and social events, they said. Staffing would be reduced, and the center would operate at a $3.6 million deficit.

The deficit projections weren’t new at that point. In 2015, the city adopted a Tempe Arts and Culture Plan, which noted that the city would need to subsidize TCA with $2.5 to $3 million a year from the general fund after the original art tax expired.

Even so, Mayor Mitchell isn’t concerned.

New Times asked the mayor why more wasn’t done to raise funds for future TCA operations during the seven year gap between when it opened and when the city created its arts and culture plan.

“I don’t believe there was a gap,” Mitchell replied in a recent interview. “The first tax funded everything it was intended to, which was building and constructing the TCA.”

Mitchell was elected mayor in 2012, but has served on the city council since 2000. So, Mitchell was around for talks about creating a TCA endowment, although he said the city wasn’t obligated to create one.

“The ballot language didn’t include an endowment,” he told New Times. “We’re on the right path to be efficient.”

Whether and how the 2015 plan gets implemented will depend in part on whether voters approve the new art tax to replace the one that expires in 2020.

In June, Tempe city council approved putting Proposition 417 on the ballot for a special election that happens November 6. It calls for a new one-tenth of 1 percent sales and use tax, starting on January 1, 2021.

Unlike the art tax passed in 2000, this tax wouldn’t sunset after 20 years, and tax revenues would go toward arts and culture throughout Tempe, rather than just the TCA.

Tempe isn’t the only Valley city that’s used a special tax to build a cultural venue. Mesa voters approved a 0.5 percent quality of life tax in 1998 to build the $95 million Mesa Arts Center.

Prop 417 doesn’t specify how much funding would go to TCA. Its wording is vague, like that of Proposition 400, which created the first arts tax back in 2000. The city’s arts and culture plan calls for using half the money raised through a new arts tax for an endowment, which is one way to foster TCA sustainability. But that language didn’t make it into the proposition.

There’s no specific detail on how to spend the new tax dollars if they’re approved. Instead, there’s a plan to make another plan.

Ralph Remington stands inside the Tempe Center for the Arts lobby.
Greg Wolf, City of Tempe
City officials want to hire a consultant to help create a business plan for the TCA. They issued the request for proposal in July; it closes on August 22.

According to the document, the city is looking for a better system of accountability, including ways of measuring success and growth.

“The TCA needs long-term assistance with goal-setting, audience development, fundraising, public relations, marketing, as well as an overall earned revenue growth structure for ticket admissions and facility rentals,” city records state.

Tempe will hire a consultant even if the tax doesn’t pass, Hearn said, but the scope of work may change.

“Arts and culture is hard to measure,” she said.

Like before, city staff can’t advocate for or against ballot propositions, including the art tax. Instead, a volunteer citizens group has arisen called Tempeans for Arts and Culture, which is working to promote the art tax with fellow community members.

The group includes Dianne Cripe, who also served on the committee that passed the first art tax in 2000. Cripe says they’d like to see the city create a citizens commission focused on how the tax money gets spent this time around. But that’s not in the works, according to Andrew Ching, Tempe city manager.

There’s still no TCA endowment, although Tempe did ink a deal with Chicago-based Northern Trust in 2015 as part of a deal to bring a new regional operations center to the city. That’s why the sign over TCA’s entrance, and TCA-related publicity, contains the company’s name.

Northern Trust got a tax break worth $7.3 million, and agreed to pay that amount “for the use and benefit of TCA.” They’ve been paying Tempe $200,000 a year, but the funds haven’t been spent. And Hearn says the city might decide to put that money toward something else, like a portable stage for Tempe’s Arts in the Parks program.

“Those funds aren’t attached to any required spending,” Hearn says. And the city can use them for art programs other than TCA, according to her reading of the agreement.

That’s no substitute for an endowment fund, which would pay operational costs with interest accrued on the fund’s principal. Yet other funding options exist. The Tempe arts and culture plan includes several recommendations.

More than 900 people provided input for the plan, which addresses several elements of Tempe arts and culture, including the TCA. The TCA portion of the plan calls for hiring a fundraising professional, who would be responsible for increasing funding from corporations, foundations, and other sources. But TCA didn’t hire professional fundraising staff until October 2017, and they’ve only raised about $100,000 to date, according to a city spokesperson.

There are additional problems, too.

Tempe-based Childsplay, a longtime anchor for TCA, will be a resident company with Herberger Theater Center in downtown Phoenix rather than TCA starting with the 2018-19 season.

More recently, TCA shifted its focus to developing and presenting its own productions, starting with film, theater, and concert offerings during the 2017-18 season. So far, they’re not generating substantial revenue.

The sole measure of success Remington cited for New Times is a 5 percent increase on a community satisfaction survey, and the bustling happy hour crowd inside the TCA lobby several times a week.

Yet without a better plan, the numbers aren't going to add up.
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Lynn Trimble is an award-winning freelance writer and photographer specializing in arts and culture, including visual and performing arts
Contact: Lynn Trimble