By Gary Schuster, Esq.

A proposed law is now pending in the New York State legislature that could mean significant new opportunities for New York artists, arts organizations and communities.

The bill is called the New York State Cultural Development Areas Act (Assembly bill A3433A, Senate bill S3317). The bill’s many co sponsors include Hudson Valley Assembly members Richard Brodsky, Kevin Cahill and Aileen Gunther. The bill demonstrates the lawmakers’ recognition that the arts can create jobs, economic growth, increased tax revenues and revitalized neighborhoods. In particular, the bill’s sponsors state:

It has been shown — as detailed in Richard Florida’s report the “Creative Engine” — that those communities with a strong local arts community often are home to creative thinkers in all industries. Vibrant arts communities often supplement arts education, and provide for leisure and intellectual stimulation. By supporting a local crop of creative people, companies seeking ingenuity in their workforce often gravitate to those communities that can cater to this population.

The bill is primarily an economic development measure, much like the well known Empire Zone program. It authorizes the creation of 2 to 4 Cultural Development Areas (CDAs) in the State. Every county may propose CDAs, but the final selection will be made by the State Commissioner for Economic Development. A county’s selection of a CDA requires adoption of a plan for the CDA and passage of a local law. Criteria include: the CDA must be less than 2 square miles; at least 25% of the CDA must be vacant, abandoned or otherwise available for development; and the CDA must have at least one “arts corporation”, or must have one within a year.

The county plan must demonstrate how creation of a CDA is necessary to create or enhance arts corporations, preserve cultural heritage or stimulate development of an arts community, and how the CDA will have a positive impact on the local economy.

The bill also calls for the designation of 100 Cultural Assets throughout the State. These are buildings owned by arts corporations which are used primarily for the presentation or exhibition of artistic or cultural performances or exhibits. The purpose of designating Cultural Assets is to provide them with benefits even though they are located outside CDAs. As with CDAs, any county, city town or village may designate a Cultural Asset by passing a local law, but the final selection will be made by the State Commissioner for Economic Development.

Arts corporations in CDAs and Cultural Assets will be eligible for benefits that include real property tax exemption, utility tax exemption, investment tax credit, employment incentive credit, wage tax credit, sales and use tax exemption, and gas or electric rates reduction. Some of these benefits may also be available to partnerships of which an arts corporation is a partner.

The bill has many other provisions covering such matters as job training and placement, and health insurance. Fundraising and capital formation are addressed through the authorization of CDA capital corporations and facilitation of the issuance of private activity bonds for the benefit of municipalities or arts corporations. There is also a personal State income tax credit for individuals who make qualified investments in or donations to CDA capital corporations. The entire text of the bill and further information is available on the Internet at

Communities selected for CDAs are likely to become economic magnets where the creative community would open studios, galleries, production facilities and performance venues, in the process creating jobs, stimulating commerce and enhancing tax revenues. Several Hudson Valley communities seem to be suitable for selection as CDAs including Cornwall, Fishkill, Hyde Park, Newburgh, Rhinebeck, Sugar Loaf and Woodstock. It is hard to predict how the CDA Act will fare. The bill was introduced in 2004 but failed to gain passage. Contacting your State Senator and Assembly member could help make a difference this year. If the bill does become law, county and arts leaders throughout Hudson Valley should be encouraged to work together to coordinate their selections of CDAs and Cultural Assets.

Gary Schuster is an attorney with Jacobowitz & Gubits, LLP, in Walden, New York. The information in this article is for general information purposes only. It is not, nor is it intended to be, legal advice for any particular person or circumstance, or for Internal Revenue Code purposes as described in IRS Circular 230. This article is no substitute for obtaining legal advice from an attorney based on your particular circumstances.