Giovanni Cicione didn’t start representing artists because he had any artistic inclinations himself. Rather, he saw signing up for the Rhode Island Bar Association Committee for Lawyers in the Arts as a way to get involved that wouldn’t be too labor intensive.
Turns out, he was wrong.
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Cicione, who said he gets referrals from the committee nearly every month, has learned that artists as a group need a great deal of legal representation on a number of issues, particularly in terms of business incorporation.
Speaking June 15 at the Bar Association’s annual meeting, the Barrington-based lawyer said many of the clients referred to him are seeking to incorporate, either as a for-profit company or a nonprofit, but many are unaware of the costs and procedures involved.
The filing fees charged by the R.I. Secretary of State and the Internal Revenue Service may turn away clients who were simply looking to run a side business selling a few paintings out of their garages, Cicione said, or artists just looking to claim more legitimacy in the community.
Whatever the case may be, Cicione said that the key in dealing with artist clients looking to incorporate is to figure out their needs and determine what type of business structure will work best for them.
“You end up, in my experience, being much more of a business adviser than most of us are comfortable [being] as lawyers,” he said.
Another key issue on which Cicione has had to advise clients is whether they should seek tax-exempt status as a nonprofit. He noted that “it’s not as easy as creating an Inc. or LLC,” and advised attorneys to explain to their clients the strict governance rules and internal controls that come along with the status.
In some cases, Cicione said, he has seen clients begin collecting donations before having their application to the IRS approved. In some cases, the application has been denied, creating headaches for the donor.
While Cicione talked about the legal workings of art corporations, real estate attorney Timothy More homed in on the concept of live/work spaces and artist lofts.
With the interest in rehabilitation projects across the state, fueled in part by the R.I. Historic Preservation Tax Credit, More said, interesting projects have sprung up in Providence and Pawtucket in particular, such as Monohasset Mill, Conley’s Wharf, The Plant, Firehouse 13 and The Steel Yard.
Because of the nature of the construction, the projects are often expensive to develop. And given the finances of most artists, the developer often can’t bet on the cost of rent helping him or her to turn a profit.
And that’s where the tax credits are helpful, he said.
“If a developer spends $1 million, he could get back $500,000, minus the fees,” he said.
Artists who have difficulties affording the rent may also have options available to them, including funds available through the cities and towns to help find a place to live.
More gave credit to Providence for its work in attracting artists to spur economic development, but even more, he highlighted the steps that Pawtucket has taken to make the arts a vital part of its future.
Particularly, he credited Pawtucket’s Business Development Corporation, which provides a number of programs, including real estate loans, equipment loans and commercial venture loans.
More also spoke about issues that can arise in artist-only residential developments. Often, he said, because of the tendency to locate the developments in rehabilitated buildings, live/work spaces are often surrounded by industrial areas, whether defunct or functioning.
Because of the health risk that can be posed, More said, developers often include provisions absolving themselves from any liability.
Also, some live/work projects choose to enforce the requirement that the occupant be an “artist” more strictly than others. More said that in several developments, outside committees oversee an artist’s submission to determine whether he or she can live the space.
For condominium projects, where the artist would purchase the space and then have the right to resell it in the future, the same approval process can apply.
“However, then you get into the issue of alienation of people’s properties rights,” More said.
