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Squatting As Economic Stimulus

December 22, 2009

by:

Joe Patti

In the last year I have posted about businesses encouraging the presence of artists in Philadelphia and London as a strategy for filling empty store fronts and infusing vitality into neighborhoods. I also wrote about artists taking advantage of obscenely low real estate prices in Detroit to purchase properties and establish a little artist colony in that city.

So I read with some interest a Guardian story about an cultural organization in London which is, though they reject the term, squatting in the high rent commercial district. The aim of the group, The Oubliette, is “to support the arts without the need for public or private sector funding.” (Appropriating involuntary in-kind donations of space from the private sector doesn’t seem to be a problem, however.)

The group does a little work prior to “moving in,” generating a business plan and proposal which highlights, among other things, the security they bring to the empty property.

They even have a sort of business plan, which they plan to tout around the capital’s wealthy property magnates. The goal? To persuade the rich to lend their empty properties to the Oubliette to use for exhibitions, concerts and plays. “It’s an alternative way of offering extraordinarily wealthy people a way to contribute to the arts without an enormous pecuniary investment,” according to the erudite Simon.

[…]

In terms of floor space, their new gaff would be the envy of nearly every arts centre in the country. It is so big, in fact, that last Friday’s event, a collaboration with homelessness charity The Connection at St Martin-in-the-Fields, only used parts of the ground and first floors. There was an art exhibition, featuring work by homeless people, as well as the Oubliette’s artist-in-residence, Philip Firsov, and a number of different classical music groups staged mini-concerts in some of the building’s many rooms.

The event was one of many unusual partnerships the Oubliette are trying to forge in an attempt to turn squatting into a legitimate way of showcasing the arts without the taxpayer’s help, while disassociating themselves from wilder, less well organised squatters in other London mansions.

[…]

The group is currently in the process of preparing PowerPoint presentations to give to the owners of empty buildings – both commercial and residential – to persuade them to allow the Oubliette to use their spaces as arts platforms. A draft pitch, seen by the Guardian, attempts to sell squatting as a way of providing free security, preventing property devaluation and adding value to the community.

Twenty-four-hour security costs £7,500 per guard per month, claims the pitch, adding that a derelict property can “result in a loss of up to 18% value on neighbouring property prices”. What’s more, the Oubliette pledge to improve empty buildings. “Our dedicated team includes certified workers in electrics, plumbing and construction,” they say, promising to “return the property back to the owner clean and functional within 28 days’ written notice of wanting the property back”.

The Oubliette is based around a “live-in core” of eight people with distinct roles, including “IT guru”, “PR operative”, “graphic designer”, “legal adviser” (a trainee barrister), “artist-in-residence” and “copywriter”. They have grand plans, according to Simon, who until 2002 was an IT worker living in Chelsea. “Our long-term strategic ambition is to negotiate for consent with an owner of a suitable empty premise for leave to remain,” he said. “Occupying properties in high-profile locations allows us to raise public awareness and garner support, whilst also furthering the organisational aspects of our project and pitch to proprietors.”

He is confident of success, and claims to have successfully negotiated consent to squat in eight properties in London in the past seven years.

While I don’t really condone squatting. I am pleased that they commit to improving a location rather than conforming to the stereotype of artists for whom mundane concerns like maintaining their environment interferes with the connection with their muse. Part of me hopes their presence helps drive real estate prices up. We all know that the arts can lead to the gentrification of run down areas. Usually the artists are priced out of the area before they can contribute to the gentrification of an already gentrified area. No one knows what the ceiling for economic stimulation by the arts might be.

State of the Arts

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Remember, The P Stands For Personal

December 21, 2009

by:

Joe Patti

I had a situation emerge related to personal URLs (PURLs) that sort of put me off. I have written about these personalized web addresses which allow you to provide a customized experience for the recipients before. I hadn’t really thought that someone might invest the time and expense of creating PURLs and not provide a customized experience. When I had such an experience, I began to question the motivation and wasn’t entirely pleased with the direction my thoughts turned.

One of my alma maters sent me a brochure saying “Joe, a lot has change since X” and provided a URL that incorporated my name. (To protect my vanity and the specific school, I am not going to mention the date of my graduation.) This created an expectation that when I visited there would something like then and now photos of the campus. Perhaps there would be one of those lists noting that kids born the year I graduated have never known a world where different situations didn’t exist. Maybe there would be a really detailed list of all the weddings, births, promotions and general accomplishments of my graduating class.

But other than my name, it was a really, really, really generic web page. The alumni page on the school website is actually more engaging. One of the links to a virtual tour lead to a YouTube video which had been removed by the poster.

One of the prominent features was a donation appeal letter by the student featured in the mailer. So at this point I start thinking maybe the whole PURL set up was to measure which alumni were engaged enough with the school to use the PURL so the school could follow up with additional appeals. This made the whole set up seem calculated and not at all personal.

I actually emailed the alumni office last week saying all of the above. I told them that the PURL created an expectation of a personalized experience and when it did not emerge, I began to suspect the worst. I have yet to hear back from them.

Quite honestly, I think I could have made the same mistake. Even if I hadn’t wanted to necessarily follow up with a donation appeal, I could imagine using PURLs to see what percentage of lapsed donors and ticket buyers were still engaged with my theatre. I probably wouldn’t create a PURL with their name but rather embed a unique code in a link they clicked through on or have a situation where people would self-identify. When we are convinced we have a way to more accurately reach and measure our intended constituency, I think it is easy to overlook the recipient’s perspective and expectations upon receiving a communication.

So my advice here is that if you create an expectation of a personalized experience, whether it is in person at your performances or via an online presence, you should be perceived as making an effort to provide it at the very least.

Audience Relations, Marketing/PR

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Wry Kaiser

December 16, 2009

by:

Joe Patti

Michael Kaiser was in town as part of his Arts In Crisis tour. The session was videoed. I don’t know if it will be placed on the internet, but the content was pretty much the same as when he spoke in Madison, WI. I had watched that video back when Andrew Taylor discussed Kaiser’s visit to Madison. If the video of our local session becomes available, I will post it.

I am not going to give a synopsis of his talk here as I am wont to do. His thoughts are pretty widely disseminated through videos like the in WI and via his column on Huffington Post. I am just going to reflect a little on the experience.

He was a very entertaining speaker and the session was quite enjoyable. I encouraged my Assistant Theatre Manager to go because he hadn’t really heard any of this before. And our discussions after about how we should proceed were pretty productive.

Our mayor is the chair of the culture and tourism committee of the National Conference of Mayors and he is pretty enthusiastic about those causes. (He also bills himself as the “Singingest Mayor In America.” I was surprised that he didn’t take the opportunity today.)

He spoke, I think longer than anyone expected, about how important the arts are. He also stayed for the full 1.5 hour session. This impressed on me how important the topic of the arts was to him because he is always on the go. I have seen him get off a 7 hour flight that crosses the international dateline, speak at a meeting about public transportation and then out to another meeting. Since he was still around as the Q&A started, the moderator brought him back up to the stage to field questions about the arts in the city.

A few observations about the session with Kaiser. The first isn’t predicated on something he said. The session opened traditionally with a welcoming chant and then a hula display. I am not Hawaiian, nor am I practitioner of any Hawaiian performing arts. However, my investment in those art forms were such that I wished they had done a slightly different program. The hula was accompanied by singers playing ukelele. This is something many people are familiar with due to movie depictions. So what I found myself wanting was for a performance on ipu heke–double gourd drum. I wanted him to go away perhaps surprised about Hawaiian performing arts and knowing more than he knew when he arrived.

Later, I was gratified to hear him say that was what he aimed for in his programming–having people surprised at some of the events he put together. His example was the Arab Festival at the Kennedy Center earlier this year. He noted nobody expects you to celebrate Arab art in the current political climate.

At one point he underscored how much the arts are dependent on the kindness of strangers when it comes to arts education. This is no great revelation, I am sure. He gave the example of a 3rd grader who benefits from her teacher loving the arts and providing many opportunities for exposure. When the child moves on to 4th grade, if the teacher doesn’t like the arts, then the child doesn’t get any exposure. If the 4th grade teacher doesn’t like math, they don’t have the option of shirking instruction in that. It occurred to me this is actually the case even in states that mandate an arts component because few schools value the subject enough to monitor compliance or ensure a valuable experience.

For me, the talk solidified and confirmed some thoughts I had over Thanksgiving about how I should be approaching various elements of my job. It was good to have the Assistant Theatre Manager start to move in the same direction. I hadn’t really spoken with him about my thinking yet because I hadn’t entirely figured out how to put it into practice. Today was a good catalyst for that conversation.

State of the Arts

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Information You Can Use: Tax Treaties and 30% Withholding

December 15, 2009

by:

Joe Patti

I was recently fortunate enough to get into a conflict with my disbursing office on the subject of the 30% withholding for foreign performers.

Well, admittedly, I didn’t feel lucky at the time. The whole issue is very confusing and time consuming. However, the outcome is such that I am a good deal wiser and more informed about the process. And more importantly, I managed with the help of the artist’s agent and the IRS to secure full payment for the foreign performers.

For those of you who may not be familiar with the issue, count yourself lucky but also be aware that you may become embroiled in a situation requiring you to withhold 30% of an artist’s fee in the future in the absence of a treaty or the proper tax paperwork. I did a couple entries about five years ago which you may want to take a look at to gain some background.

The group we were looking to bring is coming from New Zealand. Their agent was on the ball and sent me the requisite tax paperwork claiming exemption back this summer. Not wanting to have any problems crop up when it came time to send the deposit, at the end of July I sent a memo accompanying the paperwork which included the details of the engagement asking if the 30% would be withheld. I was told it wouldn’t be. It wasn’t until the check was cut and on its way over to me that the decision was made to cancel that check and issue another one less 30%.

At question was Article 7 of the US-New Zealand Tax Treaty which reads:

“The business profits of a Contracting State shall be taxable only in that state unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the business profits of the enterprise may be taxed in the other State but only much of them as is attributable to that permanent establishment. “

The agent provided an interpretation where the first Contracting State was NZ. Our disbursing office interpreted the first Contracting State to be the U.S. and deemed the performance to be goods “created” in the U.S.

In came the IRS to the rescue! You won’t see that phrase too much in life so let me say it again. In came the IRS to the rescue!

The Central Withholding Agreements office provided the following guidance which they have given me permission to reprint for your edification. Be aware that all countries have different tax treaties, but many of them are very similar to the one the US has with New Zealand so this information can be applicable in many cases.

In the following, “business entity” refers to a production company or other type of operation which owns the rights to the production and performances being presented. The presumption here is that the artists/performers are either employees or contract players for the business entity, having no ownership interest or risk from loss in the production, thus making the business entity, rather than a venue or other payer, the withholding agent for payments to the artists. Payments to these performers would be subject to rules, regulations, and treaty considerations for the individuals as artists. The business entity may apply for a tax treaty benefit with regards to payments made to the business entity if the business entity is permanently located in a country that has a tax treaty with the United States.

A valid withholding certificate, W-8BEN, presented by the business entity to the venue is used to claim a tax treaty benefit for Business Profits. CAVEAT: The business entity MUST have a US Employer ID Number on the form W-8BEN to qualify for the exemption, otherwise 30% of gross income is required to be withheld and deposited with the US Treasury on behalf of the business entity.

Tax Treaties between the US and other countries are worded so that each country reads it and approaches it as a reciprocal agreement. In each case, the “Contracting State” is the country of residence of the business entity and the “other Contracting State” is the country in which they are performing services for remuneration.

Therefore, a US business entity applying Article 7 of the US-NZ tax treaty would use the US as “Contracting State” and New Zealand as the “other Contracting State” thereby claiming exemption from tax in NZ but being subject to full taxation in the US. The business entity could not claim exemption if they had a permanent establishment in NZ.

SIMILARLY, the NZ business entity would flip-flop the terminology taking NZ as the “Contracting State” and the US as the “other Contracting State” thereby claiming exemption from US taxation and subjection to full taxation in NZ. The business entity could not claim exemption if they had a permanent establishment in the US.

As a result, a non-resident alien business entity as described above will provide to the venue a Form W-8BEN claiming the business profits tax treaty provision. The venue is relieved from any withholding responsibilities for payments to the business entity.

The business entity is still required to withhold and deposit on any payments made to or for the benefit of the actual performers.

For the withholding requirements on the individual non-resident alien artists or athletes, you may contact the IRS at CWA.Program@IRS.gov

It should be noted, that while the payment may be exempt from the 30% withholding, the foreign company must still deduct U.S. taxes from payments made to their performers. More information on this may be found on the Artists from Abroad website.

Info You Can Use, Terms and Ideas

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