Austin, Texas, with its vibrant music scene exemplified by the South by Southwest music festival, is a model for cities using the arts to revive their economies.

"The CEO of one of the biggest corporations located here told me, 'All the incentive deals and traditional policy deals that Indianapolis and other cities present are nice, but as far as I'm concerned, if you put all that money into making the city nice, both physically and culturally, that would really make a difference," he said.

That's a message that Peterson, like the leaders of many other cities around the country, heard loud and clear, and it's one that an increasing number of towns are acting on.

It's happening in Denver, in Tampa, Fla., in Portland, Ore., in Memphis, Tenn., in Pawtucket, R.I., and Paducah, Ky. And it's credited by urban planning experts with helping spur growth in such longtime cultural meccas as Austin, Texas and San Francisco, and the collegiate center of the Boston "hub."

In the case of Indianapolis, the city of more than 850,000 people has nearly doubled the direct funding it gives to arts groups. One of Peterson's first moves was to draw up a cultural tourism initiative to draw on the city's arts institutions as a tool to lure visitors, and funding for the drive is now more than $10 million over five years.

The immediate effect has been more money for artists, musicians, dancers and cultural groups, along with other amenities such as lower priced live-work spaces and tax breaks. But in most cities that are trying the approach, the longterm goal is not to create a city that looks like an updated version of New York's Greenwich Village, populated with painters, poets and folk musicians.

Instead, it is to create an environment that will make it easier for corporations either already in the city or considering relocating there to attract topnotch employees — the so-called "creative class."

According to the prevailing wisdom, these are people who want to be able to spend their free time soaking in culture. For some that might mean gallery hopping or hanging in clubs to hear cutting-edge live music, while for others it could be going to the symphony, the ballet or museums.

These members of the "creative class" are the same people who bring the kind of imagination and energy to their work that companies crave, according to the man who has become a kind of guru for the movement to grooviness, Carnegie Mellon University professor Richard Florida.

An Economic Transformation

Florida says cities need to appeal to these people, who he believes are the core of the new American economy — the people who work in "knowledge-based professions" such as health care, law, academics, design and high technology, along with the performing and visual arts, musicians and dancers.

"Clearly we are experiencing an economic transformation of sorts," said Rod Frantz, president of the Richard Florida Creativity Group, which is based in Pittsburgh. "We are moving away from a manufacturing base. We're going through an economic shift right now that compares to what happened when we went from an agricultural to an industrial economy."

But what the "creative class" is looking for, according to Florida's thinking, goes beyond galleries, museums and music venues. It's about an attitude in the city — an attitude of tolerance for different lifestyles, diversity in the community and plenty of opportunity for interaction.

"You're talking not only about beret-wearing Marxist poets," Frantz said, "but all age, gender, religious sexual orientation, ethnic and racial groups."

Austin is in some ways the model for this approach. The city has transformed itself from a town known mostly for its gritty music scene to a burgeoning center for high-tech companies.

"There are many factors that make Austin a great place to live," said Vincent Kitch, the cultural arts program manager for the Austin Economic Growth and Redevelopment Services Office. "But we recognize that the real strength of what brings business and tourists here is the arts."

The methods city governments have adopted to encourage a flourishing arts community range from offering grants to artists working on projects in the city, to real estate and tax breaks, to large grants to cultural organizations.

Artistic Migration

In Pawtucket, R.I., for example, Mayor James Doyle has focused on support for the arts, and in the process has been able to find tenants for long-vacant mills and storefronts. Pawtucket Department of Planning and Development program manager Herb Weiss said hundreds of artists have moved to the city, and that has spurred a rebirth.

A lot of the lure to bring artists to Pawtucket has been low rents on live-work lofts and tax breaks for people creating one-of-a-kind items, whether the are oil paintings or jewelry. Weiss says artists have also responded to the personal touch and assistance he can provide navigating the city's bureaucracy.

"What really sells Pawtucket is word of mouth," he said.

It doesn't hurt that the city of 73,000 is within an hour of Boston and a few hours from New York, and on the fringe of Providence — a town that rates highly in Florida's estimation of the most "creative" cities.

Pawtucket is now trying to get more restaurants to locate in its Arts and Entertainment District, where Stone Soup Coffeehouse, one of the oldest and best known folk music venues in New England, and the Sandra Feinstein-Gamm Theatre relocated after being priced out of the Providence real estate market.

Bigger cities like Indianapolis and Denver have taken a different approach, putting money into the hands of nonprofit cultural organizations that support a range of arts groups, from collectives of artisans to symphonies, ballet and dance companies and theater groups.

Like Indianpolis's Peterson, Denver Mayor John Hickenlooper believes that the best way to make the city more attractive to high-tech companies is to raise its cultural profile.

"He's always been active in the arts community," Denver Office of Art, Culture and Film director Denise Montgomery said of the mayor. "He was a leader in downtown revitalization when he opened a restaurant and brew pub in downtown in the late '80s. He's seen how the presence of artists and art galleries make for an attractive community to attract and retain companies and people."

A Real Impact?

The jury is still out, though, on how much effect any of these measures are really having in terms of economic activity.

"I'm not sure how much work has really been done to see whether there is a firm relationship between arts activity and economic development," said Thomas Lyons, a professor of urban planning at the University of Louisville. "It's a new concept, and has not yet received a high level of scholarly interest."

City officials around the country say they see the connection, though.

In Pawtucket, Weiss said for every three artist who relocate to the city, two new jobs are created for non-artists.

According to the Colorado Business Committee for the Arts, cultural organizations are the 11th largest non-governmental employer in the region. A study done by the group found that the arts generated $1.083 billion in economic impact in 2001, with 9.1 million people attending cultural events.

Denise Montgomery, the director of the Denver Office of Art, Culture and Film, said that at least one company, Level 3 Communications, a communications and information company, relocated to the Denver area because executives believed that it would have a positive effect on their recruiting efforts.

Arts Council of Indianapolis deputy director Greg Charleston pointed to a study by Americans for the Arts that found that nonprofit arts groups account for $294 million in economic activity in Indianapolis alone.

Lyons said there may be some validity to these kind of statistics, but it is not clear, for example, that the money an Indianapolis resident might spend on tickets for the theater and dinner wouldn't have just been spent on something else if there wasn't a play to go see.

"However, I believe the arts has an important role to play in economic revitalization," he said.

In Pawtucket, Weiss said hard numbers don't matter — he knows there has been a change a change in the civic attitude.

"We have seen a vitality coming into our city," he said. "We looked at it as an economic development tool that improves the quality of life for all of our residents."

As for Mesa, Arizona, the $100 million Arts and Entertainment Center now under construction in downtown Mesa could be key to revitalization of the downtown area.

According to Jon Garrido, former executive director of economic development for El Paso and former economic development coordinator for Tucson and now living in Mesa, Arizona, "Incorporating music and entertainment for all segments of the community by hosting weekly Main Street festivals utilizing the Mesa Arts and Entertainment Center as the hub may be the answer to revitalizing a city with a great history. Closing off Main Street and hosting weekly alternating street festivals from rock and roll music from the 50s, 60s for baby boomers and country, hip hop, blues, jazz, roots, folk, and an annual Mesa Mariachi USA/Latin America Festival would be the economic development stimulus that would make Main Street the place to be."

Garrido adds, "Music is the universal language of harmonious diversity that would draw thousands each weekend to Main Street."

"Weekly Main Street Mesa festivals would become the stimulus Mesa downtown has long needed ever since Fiesta Mall opened its doors to new retail sucking up the oxygen away from the old vibrant Main Street I used to remember when I was a kid growing up in Superior."