COVER PHOTO CREDIT

LUBBOCK SYMPHONY ORCHESTR ADALL AS THE ATER CENTERENSEMBLE THEATREWIMBERLEY VALLEY CULTUR AL DISTRICTHOUSTON CENTER FOR CONTEMPOR ARY CR AF T TE X AS COMMISSION ON THE ARTS

FOUR CASE STUDIESNOVEMBER 2016

THE TOURISM ECONOMIC IMPACT OF CULTURAL DISTRICT GRANT FUNDING

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TheImpactofCulturalDistrictGrantFunding:Introduction

TheTexasCommissionontheArts(TCA)wasgivenauthorityin2005bythe79 TexasLegislature todesignateCulturalDistricts incommunitiesacrossthestate.Thesespecificareasuseexistingculturallandmarksandresourcestogenerateeconomicdevelopmentandcommunityrevitalization.Currently,thereare35TCA-designatedCulturalDistrictsin30cities.DuetothecollaborativeworkoftheTexasCulturalTrustandTexansfortheArts,the84 TexasLegislatureappropriated$5.0milliontoTCAforcreatinga competitive grant program to support economic development withinCultural Districts. In December 2015, 20 grants totaling $1.5million wereawardedtoCulturalDistrictslocatedinDallas,ElPaso,Galveston,Houston,Lubbock, San Elizario, and Wimberley. These eleven designated CulturalDistricts were funded in amounts ranging from $10,000 to $500,000 forprojectsfocusingonsignificantculturaltourismefforts.Thefundedprojectsfocused on marketing, infrastructure investment, and support for majorevents.ThegrantfundingwasanticipatedtoattractadditionalvisitorsandrevenuetotheCulturalDistrictsandtheirculturalinstitutions.As Texas’ leading voice for the arts in education, advocacy, and economicdevelopment,theTexasCulturalTrustretainedTXP,Inc.(TXP)toevaluatetheeconomicimpactoffourprojectsreceivingTCAgrantfunding.Aspartofthisprocess, TXP interviewed Cultural District grant recipients; reviewed theirfunding applications; and created amethodology to estimate the tourismeconomicimpactontheregionaleconomyThefourcasestudieshighlightthevarietyofculturalartsopportunitiesthatexist for every community, large and small, throughout Texas. While thisanalysis focuseson the tourism implications, therearenumerous spilloverbenefitsthathavenotbeenquantified.

Figure1:CulturalDistrictProjectGrantRecipients2015

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TheImpactofCulturalDistrictGrantFunding:Methodology&Approach

TXPcontactedeachCulturalDistrictcasestudygrantrecipient(therecipient)to collect information about how the funding would be used, obtainestimatesontotalattendanceateachexhibit/event,andanalyzeZIPCodedata on where visitors live. One of the goals of the TCA Cultural Districtprogramistopromoteanddevelop“marketabletourismassetsthathighlightthedistinctidentityofacommunityandencouragein-state,outofstate,andinternationalvisitors.”Basedonthedatacollectedbytherecipients,TXPwasable toestimate thenumberof local, regional, andovernight visitors. TXPtranslatedthisinformationintonewdirecteconomicactivityfortheregion.Localvisitorspendingwasnotincludedbecausetheseresidentswouldlikelyspendmoneyatanotherculturalattractionincommunity.TXPusedaveragevisitorspendingdata(daytripandovernight)fromtheOfficeoftheGovernor,EconomicDevelopmentandTourismtoapproximate thedirect increase inlocaleconomicactivity.TXPalsoadjustedtheinputmodeldatatotakeintoconsideration spending by exhibitors. Based on the increase in economicactivity,TXPcalculatedthenewtaxrevenuecollectedbytheStateofTexas.EconomicImpactofMethodologyEconomistsuseanumberofstatisticstodescriberegionaleconomicactivity.Fourcommonmeasuresare“Output”whichdescribestotaleconomicactivityand is generally equivalent to a firm’s gross sales; “Value Added” whichequalsgrossoutputofan industryora sector less its intermediate inputs;“Labor Income” which corresponds to wages and benefits; and“Employment” which refers to jobs that have been created in the localeconomy.Inaninput-outputanalysisofneweconomicactivity,itisusefultodistinguishthreetypesofexpenditureeffects:direct,indirect,andinduced.

Directeffectsareproductionchangesassociatedwiththeimmediateeffectsorfinaldemandchanges.Thepaymentmadebyanout-of-townvisitortoahotel operator or the taxi fare paid for transportation while in town areexamplesofdirecteffects.Indirecteffectsareproductionchangesinbackward-linkedindustriescausedby the changing input needs of directly affected industries typically,additionalpurchasestoproduceadditionaloutput.Satisfyingthedemandforan overnight stay will require the hotel operator to purchase additionalcleaningsuppliesandservices.Thetaxidriverwillhavetoreplacethegasolineconsumed during the trip from the airport. These downstream purchasesaffecttheeconomicoutputofotherlocalmerchants.Induced effects are the changes in regional household spending patternscaused by changes in household income generated from the direct andindirecteffects.Boththehoteloperatorandtaxidriverexperienceincreasedincomefromthevisitor’sstay,asdothecleaningsuppliesoutletandthegasstation proprietor. Induced effects capture the way in which increasedincomeisspentinthelocaleconomy.A multiplier reflects the interaction between different sectors of theeconomy. An outputmultiplier of 1.4, for example, means that for every$1,000 injected into the economy, all other sectors produce an additional$400inoutput.Thelargerthemultiplier,thegreatertheimpactwillbeintheregionaleconomy.Forthisanalysis,TXPusedtheRIMSIIeconomicimpactmodelforeachregionbeingexamined.

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TexasCulturalTrust&Partners

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TEXASCULTURALTRUSTThe Texas Cultural Trust is a 501(c)(3) nonprofitorganizationwhosemission istobethe leadingvoiceforthearts ineducation, advocacy, andeconomic impact inTexas, spotlighting the artistic excellence of our state.ProgramsoftheTexasCulturalTrust includethebiennialTexasMedalofArtsAwards,TexasWomenfortheArts,theTexasYoungMastersProgram,theArts&DigitalLiteracyInitiative, the Invest in the Arts. The Arts PerformLegislativeCampaign,andtheArtCanInitiative.TheTrustalso supports the programsof the Texas CommissionontheArts andotherqualifying state agencies. Since2008,the Texas Cultural Trust has invested more than $3.2million into arts awareness and education, bringing thetotal investment to more than $4.9 million. For moreinformation on the Texas Cultural Trust, please visitwww.txculturaltrust.org.

TEXASCOMMISSIONONTHEARTS(TCA)Grants,Information,andTechnicalAssistancefortheArtsTheTexasCommissionontheArtswasestablishedbytheTexas Legislature in 1965 to advance the stateeconomicallyandculturallybyinvestinginacreativeTexas.By providing resources to enhance economicdevelopment, arts education, cultural tourism and artistsustainabilityinitiatives,theTexasCommissionontheArtssupports a diverse and innovative arts communitystatewide.

TEXANSFORTHEARTSPoliticalAdvocacyfortheArtsTexans for the Arts is a highly effective, non-partisan statewide arts advocacy organization

that organizes advocacy efforts in order to protect and increase publicfunding for the arts at the state, national and local levels and providescoordinated information about legislative activity related to arts issues.Texans for theArts' legislativeagendaadvocates for thedevelopmentandimplementationofpublicpolicythatsupportsastrongandvibrantartsandculturalindustry.Inadditiontoitslegislativeactivity,TexansfortheArtsworkscloselywithitspartnerorganizationTexansfortheArtsFoundationtoproducethebiennialTexas Arts Advocacy Day, the biannual Arts Funding & LeadershipDevelopmentWorkshop,andservesas"StateCaptain"forAmericansfortheArtscollaboratingonnationalartsadvocacyefforts.

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AboutTXP,Inc.

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TXPisaneconomicanalysisandpublicpolicyconsultingfirmfoundedin1987inAustin,Texas.Ourclientshavediscoveredthatwearethefirmtohirewhenthereisnotanimmediate,obvious,orsimplesolutiontotheireconomicorpublicpolicychallenge. Inadditiontodrawingontheexpertiseofourfirmmembers,weregularlypartnerwithurbanplanning,engineering,andpublicpolicyfirmstoputtogetherteamsuniquelysuitedtoourclients'needs.TXPoffersafull-rangeofeconomicanalysisandforecastingservicestopublicandprivateclients.Thefirmspecializesinapplyingfocusedprimaryresearchtoenhancesecondarydata.TXPoffersanumberofotherservicestoclients,including periodic reports highlighting economic trends in regionaleconomiesandpresentationstoarangeofstakeholders.TXPcurrentlyservesas economist-on-retainer for a number of high-profile private and publicsectorclientsthroughoutTexas.TXPhassuccessfullyhelpedclientsmanagethebalancebetweeneconomicdevelopment,landuseplanning,andinfrastructuredevelopmenttoensureoverall communityprosperity.Our teamprovides in-depthanalysison theconnectionbetweentaxbaseenhancementandservicecostreduction,andworkswithcommunities,stateagencies,localgovernments,universities,anddeveloperstofacilitategrowthandredevelopment.TXP,Inc.1310South1stStreet,Suite105Austin,Texas78704(512)328-8300phonewww.txp.com

LegalDisclaimerTXPreservestherighttomakechanges,correctionsand/orimprovementsatanytimeandwithoutnotice.Inaddition,TXPdisclaimsanyandallliabilityfordamagesincurreddirectlyorindirectlyasaresultoferrors,omissions,ordiscrepancies. TXP disclaims any liability due to errors, omissions ordiscrepanciesmadeby thirdpartieswhosematerial TXP reliedon in goodfaithtoproducethereport.Anystatementsinvolvingmattersofopinionorestimates,whetherornotsoexpresslystated,aresetforthassuchandnotasrepresentationsoffact,andnorepresentationismadethatsuchopinionsorestimateswillberealized.Theinformationandexpressionsofopinioncontainedhereinaresubjecttochangewithoutnotice,andshallnot,underanycircumstances,createanyimplicationsthattherehasbeennochangeorupdates

AboutTXP,Inc.

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TXPisaneconomicanalysisandpublicpolicyconsultingfirmfoundedin1987inAustin,Texas.Ourclientshavediscoveredthatwearethefirmtohirewhenthereisnotanimmediate,obvious,orsimplesolutiontotheireconomicorpublicpolicychallenge. Inadditiontodrawingontheexpertiseofourfirmmembers,weregularlypartnerwithurbanplanning,engineering,andpublicpolicyfirmstoputtogetherteamsuniquelysuitedtoourclients'needs.TXPoffersafull-rangeofeconomicanalysisandforecastingservicestopublicandprivateclients.Thefirmspecializesinapplyingfocusedprimaryresearchtoenhancesecondarydata.TXPoffersanumberofotherservicestoclients,including periodic reports highlighting economic trends in regionaleconomiesandpresentationstoarangeofstakeholders.TXPcurrentlyservesas economist-on-retainer for a number of high-profile private and publicsectorclientsthroughoutTexas.TXPhassuccessfullyhelpedclientsmanagethebalancebetweeneconomicdevelopment,landuseplanning,andinfrastructuredevelopmenttoensureoverall communityprosperity.Our teamprovides in-depthanalysison theconnectionbetweentaxbaseenhancementandservicecostreduction,andworkswithcommunities,stateagencies,localgovernments,universities,anddeveloperstofacilitategrowthandredevelopment.TXP,Inc.1310South1stStreet,Suite105Austin,Texas78704(512)328-8300phonewww.txp.com

LegalDisclaimerTXPreservestherighttomakechanges,correctionsand/orimprovementsatanytimeandwithoutnotice.Inaddition,TXPdisclaimsanyandallliabilityfordamagesincurreddirectlyorindirectlyasaresultoferrors,omissions,ordiscrepancies. TXP disclaims any liability due to errors, omissions ordiscrepanciesmadeby thirdpartieswhosematerial TXP reliedon in goodfaithtoproducethereport.Anystatementsinvolvingmattersofopinionorestimates,whetherornotsoexpresslystated,aresetforthassuchandnotasrepresentationsoffact,andnorepresentationismadethatsuchopinionsorestimateswillberealized.Theinformationandexpressionsofopinioncontainedhereinaresubjecttochangewithoutnotice,andshallnot,underanycircumstances,createanyimplicationsthattherehasbeennochangeorupdates