The Art$ – Part II


In my most recent post (The Art$), dear reader, we started a conversation about some of the differences between very large cultural organizations and, well, everybody else.  I pointed out that members of the Cultural Institutions Group (CIG) tend to be concentrated in the upper bracket.  I also said that, frankly, there should be further research conducted on how income streams and strategies vary based on whether or not an organization is a member of the CIG.  (For a powerful statement on funding inequity in the arts, check out this really great report written by Holly Sidford for the National Committee for Responsive Philanthropy.)

But while being a member of the CIG may make you privileged, it doesn’t make you evil.  I think that good policy comes out of an informed debate about our resources and our choices in using those resources.  We’ve got all this lovely data, so let’s use it to analyze the assumptions underlying the present system. Assumptions we can analyze, assess and alter – or not – based on our current, best understanding.

So, let’s look at another juicy issue.  In our last episode, our hero was pondering the following chart:  Continue reading

The Art$


It was weird.

Dear reader, your Man About Town has been to the very precipice, where I stood and looked down.  It was weird.

You see, it all started when some of the lovely folks over at the Municipal Art Society (Hi Mary! Hi Anne!  Hello Vin!), invited me to come and do a research project for them called “Who Pays for the Arts.”  The job was to tool through data provided by the Cultural Data Project (CDP) and better understand how arts organizations in NYC make their money.  To whit:  in order to apply for public funding in NYC, you have to submit, like, a gajillion data points to CDP.

Exciting!  Data geek that I am my little heart just fluttered with glee.  Numbers!  Charts!  Oh yeah!  Uh huh!  That’s right!

So I started digging through the data and the very first question I asked was, you know, what does the distribution curve look like?  Given that I’m looking at total 2010 revenues for 723 organizations, and that the whole group all mushed together made $2.5 billion, how many groups are on the high end, how many in the middle, and how many on the low end?

And this is what I found: Continue reading

In Praise of (Stinky, Noisy) Bars


Reposted from Rooflines.

Nighthawks, Edward Hopper

The vaunted “third space” isn’t home, and isn’t work – it’s more like the living room of society at large.  It’s a place where you are neither family nor co-worker, and yet where the values, interests, gossip, complaints and inspirations of these two other spheres intersect.  It’s a place at least one step removed from the structures of work and home, more random, and yet familiar enough to breed a sense of identity and connection.  It’s a place of both possibility and comfort, where the unexpected and the mundane transcend and mingle.

And nine times out of ten, it’s a bar. Continue reading

NY City Council Testimony on Naturally Occurring Cultural Districts


This past Friday (May 11, 2012)  I had the pleasure of testifying before a joint hearing of the Committee on Small Business, and the Committee on Cultural Affairs, Libraries and International Intergroup Relations of the New York City Council.  The topic?  “New York City’s Cultural Sector and Derivative Small Businesses.”

Hello!  Mouthful!

But I was asked to offer framing comments to complement testimony by my colleagues  from the Naturally Occurring Cultural Districts Working Group.  I’ve skipped the preliminaries (you know, hello and thank you committee Chairperson for this opportunity to yadda yadda) and cut right to the meat and potatoes:   Continue reading

What’s Next in Arts and Economic Development


Reposted from my guest blog on Rooflines.

My latest rock musical: The Bowery Wars (Part II)

There’s something you should know about me:  I’m a professional amateur.  For the past 7 years I’ve been composing and performing music in original theater works with my wife’s company, Downtown Art.  We’ve just opened our latest piece, Bowery Wars (Part 2), a rock musical about the history of the Lower East Side 100 years ago, Tammany Hall politics, gang warfare, and Romeo & Juliet.  It rocks, and yes you should come see it.

But I’m not just here to flog my latest masterpiece.  We professional amateurs are artists who fly under the radar.  We don’t make our livelihood from our art.  We do other things to put bread and butter together.  I happen to be a highly compensated community development consultant, but many of my peers are dog walkers, administrative assistants, massage therapists, and restaurant workers.  (By the way, in another shameless plug, you should check out my brother Dan’s blog on the lives of restaurant workers and artists in Chicago).  I also serve on the Naturally Occurring Cultural Districts Working Group, and I’m currently doing some research for the Municipal Art Society on revenue trends for the nonprofit cultural sector.  In my previous work I ran an “Arts and Economic Development” giving strategy from the Deutsche Bank Americas Foundation along with my colleagues Gary, Alessandra and Sam (hi guys!).

All in all, you might say I have a rather engaged perspective on the question of where arts and economic development intersect, and where they don’t.  There are four major trends right now in NYC. Continue reading

Why Foreclosure Buybacks Are (not) Wrong


Why Foreclosure Buybacks Are (not) Wrong

I happened upon this posting yesterday and I while I try to maintain a position of anti-snarky-ness, I found it very difficult to find any common ground with the perspective that foreclosure buybacks are wrong.

Allow me to explain.

Things are so really ugly out there right now in foreclosure land that some homeowners in Detroit are resorting to an usual strategy:  they appear to be going into default and allowing the bank to foreclose, then purchasing the property back at the foreclosure auction on the courthouse steps (frequently through a family member or similar sympathetic confederate).

The author cites the following:

The Detroit News reports that in the past year “about 200 of nearly 3,700 Detroit properties sold at auction last year that appeared to be bought back by owners, some under the names of relatives or different companies and many for $500. The total in taxes and other debts wiped away was about $1.8 million.”

I should note that the author appears to be a mortgage broker who is no doubt losing possible commissions the to so-called “buyback artists” he discusses in his article.  No doubt he would prefer they all do short sales (ugh).  We’ll leave aside the author’s obvious self-interest for the time being.  Let’s also leave aside the following:

  • That the banks clearly are dying to unload these properties if they are actually selling them for $500 a pop (they’ve essentially written these properties off as worthless);
  • That if they aren’t sold at auction they go into the bank’s REO portfolio where they would likely rot, causing all kinds of mischief for the bank, the neighbors and the city of Detroit; and
  • That if these properties are going to sell, they are going to be bought by somebody – so why not the former owner who actually has a personal stake in the well-being of the property and the community.

Taxes and “other debt” of $1.8 million are being “wiped away” in the auctions, depriving the good citizens of Detroit of much needed municipal revenues.  That is a concern.  While 200 “buybacks” are significant, that’s just over 5% of the total foreclosed housing stock sold at a given auction in Detroit.  Furthermore, according to the very lovely Detroit Drilldown provided by Social Compact, there were a total of 6,259 foreclosures in 2010 (and a total of just under 59,000 since 2005).  We’re talking about 500 properties “bought back” per year, if the ratios hold.

In doing the math, that $1.8 million loss comes out to about $9,000 a property.  Last time I checked, it costs about $10,000 to knock down an abandoned property and turn the foreclosed home into a vacant lot.  Detroit as a city clearly comes out a winner when property owners “buyback” foreclosed properties based on the cost of removal of blighted and abandoned properties alone.

Never Fear, Buybacks Won’t Go Mainstream

I actually think this is a very clever and viable solution for homeowners in unaffordable mortgage products, but it’s a niche solution.  It’s never going to be the solution for the foreclosure crisis.  Why?  Because in order for such a solution to obtain, you need an extremely weak housing market, and very little competition among purchasers.  Markets like this do exist in cities with long-term population decline (like Detroit), but these are the minority of housing markets (despite weak real estate prices across the board), and appear to be fairly limited to “rust belt” cities in the midwest.  And I can say “rust belt” without irony or derision because I was born in Dayton, Ohio.

Sheriff refuses to conduct evictions in Philly.

Furthermore, most homeowners in my experience don’t actually want to risk the credit damage of foreclosure, the trauma and logistical challenges of vacating the home when the sheriff shows up, or the risk of losing the home at auction to another bidder.  While this may be a solution for some, it’s just not going to become the kind of trend the author wants to portend.

They Are All Cheats and Liars

I believe good policy is based on how people think, and not on how people feel.  What the author here is really saying is:  these homeowners are cheating the system.  They are breaking the covenant of the mortgage agreement and taking advantage of weaknesses in the system for their own personal gain.  They are systematically ripping us off, and we deserve to have our rights protected against the likes of these malefactors.

This should sound familiar.  First off, dear reader, I hope it will remind you of claims made about so-called “strategic defaulters” – where underwater mortgage holders were purportedly defaulting on their mortgages, then buying the marked down house a block over and walking away from their initial home.  This did happen, but at nowhere near the scale the punditry might suggest.  In my experience in NYC, I never met a single one of these strategic defaulters.  On the contrary, I met hundreds if not thousands of homeowners who valiantly fought mortgage default by wrecking their 401k’s, poaching the kid’s college savings fund, maxing out the credit cards, and generally robbing Peter to pay Paul.  People, ultimately, really don’t want to lose their homes.

But this should also remind readers that brokers, mortgage originators, banks, servicers, and foreclosure mill attorneys HAVE been systematically taking advantage of the system.  This is not just about “robo-signing,” but also the lack of ability to show standing, poor document handling during modification, and dubious origination practices.  Again, let’s leave aside a whole host of other issues between those who securitized mortgage backed securities or sold credit default swaps against them in their relations with their counterparties.  Those are deep waters and the subject of a soon-to-be-post.

It might be tempting, therefore, to toss “buyback” homeowners and less than scrupulous financial sector actors into the same bucket, or to paint them both with the same black brush.  But I believe there are important differences for “buyback” homeowners:

  • They are not acting out through multiple, serial transactions a pattern of neglect, manipulation or abuse – they are acting instead in (what I would call rational) self-interest on a single transaction that is saving their home;
  • The net outcome of a buyback looks like it’s ultimately of benefit to all parties: banks get rid of a property they don’t want, homeowners get to keep a property they do want, communities avoid an eyesore and keep a neighbor, and cities avoid costly abandoned properties that they then have to deal with at a net loss;
  • Contracts are built to be broken.  That’s why the terms of every contract include elements that dictate what happens when the contract IS broken.  What these homeowners are doing is actually legal.  And intelligent, given their circumstances.   While it’s possible to raise the question of whether such actions should be governed by other terms that make it more difficult or impossible, that is a policy discussion or a matter between contracting parties.  As I hope I make clear above, for public policy purposes buybacks appear to provide a net win for all parties.

So, I don’t buy it that buybacks are wrong.  On the contrary, they appear to me to be a viable solution, if a limited one, and should probably be encouraged by local authorities and advocates where possible.  I would be surprised if we hear a lot more about this issue itself, but it’s as good an opportunity as any to highlight the differences between systematic abuse and practical, strategic revision.