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SR-407-007 (3) F:\CAD\COUNCIL\REPORTS\arts commission means testing.doc May 8, 2001 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Recommendation from the Arts Commission Regarding the Means Testing of Artist Incomes for Artist Day-Studio Space at Santa Monica Airport Introduction This report recounts the action taken at the April 23, 2001 meeting of the Santa Monica Arts Commission in response to the City Council’s April 10, 2001 request for the Arts Commission’s further review of the feasibility of means testing of artist incomes for leasing of artist day-studio space at the Santa Monica Airport. Background On December 5, 2000, the City Council approved guidelines for the leasing of non-aviation City property at the Santa Monica Airport which included the rental of a building for use as artist day-studios at below market rates. On April 10, 2001, the City Council considered a request from the Arts Commission that it re-examine the criteria by which artists would be selected as tenants for the day-studios. In a letter dated March 26, 2001, the Arts Commission recommended to the City Council that an income maximum be established for artist applicants that would correspond with 80% of the Los Angeles County median income. The City Council supported the intent of the Commission’s request and directed staff to provide information on the income levels of existing tenants at the Santa Monica Fine Arts Studios (the proposed master lessee of the day-studio space at 3026 Airport Avenue) and present this information to the Arts Commission. The Council requested that the Commission consider the feasibility of establishing a percentage of tenants in the 3026 Airport Avenue space to be subject to the means testing requirement. Discussion At its meeting on April 16, 2001, the Arts Commission discussed the City Council action. Staff explained to the Commission that means testing of individual existing tenants at Santa Monica Fine Arts Studios has not been done in the past and was not a condition of tenancy and therefore income level information was not available. At this meeting there was considerable discussion concerning the Los Angeles County median income levels and whether the Commission’s original request was meant to apply to the master lessee space at 3026 Airport Avenue. It was determined that the Commission’s Artist Live/Work/Studio Committee should hold a special meeting to discuss these issues further and make a recommendation to the Commission. That meeting took place on April 23, 2001 and was followed by a special meeting of the Arts Commission. The following summarizes the action taken at the April 23, 2001 special meeting of the Santa Monica Arts Commission: A. Masterleased Hangar, 3026 Airport Avenue – Santa Monica Fine Art Studios A motion was made to grandparent all current Santa Monica Fine Art Studio (SMFAS) artists into the new SMFAS programs at 3026 Airport 2 Avenue without a means test provided that new program opportunities be restricted to artists meeting means test. The motion passed. A motion was made to implement a means test for future tenants of the SMFAS based on the Housing and Urban Development (HUD) Schedule using 175% of the Los Angeles-Long Beach SMSA Median Family Income to be applied only at the beginning of occupancy. The motion passed. (See Attachment A) A motion was made that the means test be applied at the time of their initial tenancy to all non-grandparented tenants of SMFAS and future tenants until 50% of all participants have qualified income levels. The motion passed. A motion was made that SMFAS give priority to artists who live and/or work in Santa Monica or provide evidence of being displaced from previous studio spaces in Santa Monica. The motion passed. B. Other Artist Day-Studios at Airport Operated by Economic Development Division A motion was made that a means test of 200% of the HUD schedule of Los Angeles-Long Beach SMSA Median Family Income be applied at the beginning of tenancy for all new artists leasing spaces at the Santa Monica Airport directly from the City and that priority be given to artists who live and/or work in Santa Monica or provide evidence of being displaced from previous studio spaces in Santa Monica. The motion passed. (See Attachment A) The motions adopted by the Arts Commission endeavor to make City subsidized spaces at the Santa Monica Airport available to local artists and artists of moderate means. At the same time, the limits on income suggested by the Commission allow for a wide range of artists to make use of these facilities. The Commission raised the income levels from the previous recommendations for two reasons; first, to account for the significant cost of art 3 materials and production without using a net income approach that is difficult to audit; and second, to evaluate gross household income rather than the individual income of the artist which prevents the manipulation of the rules by submitting individual tax returns. The income levels have been set higher for tenants in the City-operated spaces due to the fact that those artists will be required to pay directly for insurance, utilities, improvements, maintenance and other costs of tenancy. In contrast, in the SMFAS space, utilities and other costs of tenancy will be paid by the master lease holder. Budget/Financial Impact These recommendations contain no financial impact on the City. Recommendations: The Santa Monica Arts Commission respectfully requests that the City Council adopt the means testing as recommended by the Commission and direct staff to incorporate these recommendations into the lease with Santa Monica Fine Arts Studios and apply these conditions to applicants for City-managed airport day-studio spaces. Prepared by: Barbara Stinchfield, Director, Community and Cultural Services Jeff Mathieu, Director, Resource Management Maria Luisa de Herrera, Cultural Affairs Manager Mark Richter, Economic Development Manager Hamp Simmons, Cultural Affairs Coordinator 4