To: HONORABLE MAYOR AND From: Jim McBride

CITY COUNCIL

Subject: CHANGE TO ARTS GRANT LIMIT Date: October 29, 2003

- PROJECT & PROGRAM GRANTS

COUNCIL DISTRICT: City-Wide

RECOMMENDATION

Adoption of a resolution approving a change to the Project & Program Arts Grant Program by reducing the maximum grant amount in the Project & Program Arts Grant Program from $30,000 to $18,000 for FY 2004-05, in order to be better aligned with the amount of funds available to support arts grants.

BACKGROUND

The City Council first approved a specific maximum grant amount - $25,000 - in the Project & Program Arts Grant Program (“Program”) in 1994, which took effect for FY 1995-96 grants. Previously, the Program guidelines identified only a specific minimum grant amount. In 1997, the Council amended the maximum amount to $30,000, effective beginning with FY 1998-99 grants. From 1997 until FY 2000-01, the City realized increases every year in Transient Occupancy Tax (TOT) revenues, the principal source of support for arts grants. Consequently, the total amount awarded in arts grants peaked in FY 2001-02 and has declined since then. The combined total of arts grants in FY 2003-04 is below the FY 1997-98 level.

As the maximum grant amount in Program guidelines has remained constant despite decreasing TOT revenues, there has been an increasing gap in the last two years between the grant amounts requested by applicants in the Program and the grant awards actually made to successful applicants. In addition, the number of unsuccessful applicants for FY 2003-04 grants was more than twice the number in the previous year - a result, mainly, of reduced funds available, not a general decline in the quality of applications.

ANALYSIS

In FY 2003-04, although the maximum grant amount possible under current Program guidelines was $30,000, and seven of 37 organizations applied for the maximum amount, the largest grant the Arts Commission recommended was $20,151. More than half of the Commission’s recommendations were for amounts less than $15,000, and 12 applications were recommended for no funding, an unusually large number.

At the same time, based on currently observable trends in hotel occupancy in San José, it appears unlikely that there will be a significant rise in TOT revenues next year.

Reducing the maximum possible grant amount should allow arts organizations interested in winning Program grants to have more realistic expectations of the grant amount for which they should apply. In addition, the reduced maximum should allow the proportion of successful applications to return to more normal historic levels.

PUBLIC OUTREACH

Two public meetings were held to review and obtain feedback to reducing the maximum grant amount. They were attended by a total of more than 40 persons, almost all representing arts organizations. The Arts Commission then reviewed the proposal at its October 8, 2003, meeting and voted to recommend a maximum grant amount of $18,000.

COORDINATION

This memo has been coordinated with the City Attorney’s office.

CEQA

Not a project.

JIM MCBRIDE

Acting Director, Conventions, Arts & Entertainment