The arts are often seen as merely a pleasant diversion with little capacity to contribute to a state's economic health. Misunderstood in this way, the arts are frequently targeted for budget cuts when other seemingly more practical state programs require additional funds. Newly developed or restored cultural areas and spaces, however, are proving to be an important factor in the economic vitality of cities, towns, and states. Once the economic value of art spaces is recognized, state support for such spaces can be argued for in part on the basis of their contribution to a state's economic development.

The purpose of this paper is to (1) explain how the arts in general and art spaces in particular are economic assets for a community; (2) outline what cities and states have done to encourage the development of art spaces; and (3) suggest ways in which legislators can further encourage the development of appropriate spaces for the arts.

This report is not intended as a comprehensive survey of all possible means by which states can enhance the effectiveness of the economic impact of the arts through support of arts spaces; rather it highlights carefully selected examples that can serve as models for future legislation.

CONTENTS
I. Introduction.

II. The arts as an economic asset: 

A. Measurement of economic impact.
     1. Direct spending.
     2. Indirect spending.
     3. Induced spending. 
B. Elements measured by economic impact studies. 
C. Evidence of economic impact of the arts. 
D. Beyond economic impact.

III. Strategies for the development of art spaces: 

A. Rationale for provision of arts spaces. 
B. Methods for providing arts spaces.
     1. Artists' live/work spaces.
     2. Spaces for small arts organizations.
     3. Adaptive re-use and new construction.
     4. Urban redevelopment.
     5. Mixed-use development.
     6. Cultural districts.
     7. Cultural planning.

IV. Legislative action: Past, present and future.

V. Conclusion.

VI. Notes.

VII. References.

The arts are often seen as merely a pleasant diversion with little capacity to contribute to a state's economic health. Misunderstood in this way, the arts are frequently targeted for budget cuts when other seemingly more practical state programs require additional funds.