In Live Music Capital of the World, venues feel let down by Austin leaders

The money didn’t come, or it wasn’t enough. And now, many in Austin’s music scene feel like they’ve been left to fend for themselves as the coronavirus pandemic continues.

The Austin music industry has reached a “precipice,” said Cody Cowan, president of the Red River Cultural District merchants association, on Aug. 24, a few days after the release of funds from a pair of city-administered COVID-19 disaster relief programs. With midsized venues ineligible for one program and some legacy Austin clubs denied funding from both, local music leaders feel betrayed by a city that built its brand on their backs.

“We've hit that moment where the cards are on the table,” Cowan said in a roundtable discussion with music advocates on Austin360’s weekly Monday Music Mashup streaming show. Music venues have been closed for almost six months with no revenue as debt piles up. Cowan believes his district — which until March was a thriving cultural hub, the heart of Austin’s downtown music scene and the envy of music enthusiasts in cities around the world — is tipping toward a “70% loss of spaces,” a figure he considers a “conservative estimate.”

According to dashboards published by the city’s Economic Development Department, $417,000 of the $1 million Austin Creative Space Disaster Relief Program went to 12 music venues, and $377,000 of the $16.5 million Austin Small Business Relief Grant went to 20 music venues. The latter number is less than half of the $888,417 that the city paid the Better Business Bureau to administer the small business grant program.

More than 2,500 businesses applied for the small business grant. Businesses classified as restaurants, commercial kitchens and other eating and drinking places had the highest number of applicants and received the largest share of the payout, $4.3 million. Arts, entertainment and recreation businesses received $1.4 million, and personal care service businesses like hair salons and barbers received $1.3 million.

“We are prioritizing industries most at risk of permanent injury: music, artists, venues, restaurants, bars, childcare. We are also distributing funds right now for rent and other kinds of assistance, which are also open to musicians and artists,” Austin mayor Steve Adler told the Statesman on Tuesday.

Some legacy music venues, including the Saxon Pub, a 30-year-old South Austin music lounge, and Flamingo Cantina, one of the last clubs programming original live music on Sixth Street, did not receive money from either of the funds.

“This is disappointing,” Saxon Pub owner Joe Ables said on Aug. 21. Like the rest of Austin’s music industry, his club stopped “dead in the water” when the city shuttered bars on March 17, he said. Now his employees, some of whom have worked for him for 30 years, are collecting unemployment. Ables is frustrated by a grant application process that he felt was inadequate.

“I (didn’t) even get a call from anybody. I didn't get interviewed. Nothing. I sent out a stupid little form that basically had more questions about my age and race and everything else,” he said.

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Flamingo Cantina received a grant from the Creative Space Assistance Program in 2019 that owner Angela Tharp said will cover a couple more months of rent. It was costing her $1,500 a month to keep utilities on at the club, so now Austin’s home for reggae, hip-hop and world music since 1991 sits dark.

The Continental Club was approved for the creative spaces grant and a city disaster recovery loan, club owner Steve Wertheimer said.

Midsize venues like popular Red River club the Mohawk were not eligible for the small business grant program because they had more than 25 “full-time equivalent” employees. In setting criteria for the grant, the city counted all part-time employees as half of a full-time employee, regardless of the amount of hours they worked.

“It's unconscionable and shameful that job creators are excluded from grant programs,” Austen Bailey, talent buyer for the Mohawk and co-captain of the Texas advocacy committee for the National Independent Venue Association (NIVA), said during the roundtable.

James Moody, owner of the Mohawk, said the club did receive funding from the creative spaces program and he is appreciative, but he feels the city aid programs for venues were not thorough enough. “Too little, too late” has become a common refrain among club owners.

There was “some optimism” about how much money would be available, “and then when it started getting released, it just wasn't enough,” he said.

Much of the Mohawk’s business revolves around touring shows. Bailey believes that industry will not restart in earnest “until there's a viable vaccine” for the coronavirus. Given the patchwork of pandemic safety regulations from state to state and potential quarantine requirements on travelers from high-infection areas of the country, he said the second quarter of next year is an optimistic target date for tours to resume.

Even if restrictions on gatherings are lifted and capacity limits loosened, the crowds music venues rely on might not come.

“We're trying to just bridge the gap to a time when we can reopen at the beginning of next year,” Moody said. “And then (we’ll) see if there's a market.”

Moody also is concerned about the health of the cultural district as a whole. “I have no interest in being the only club on the street, because the way this thing works is people go out to multiple shows in one night,” he said. “That's why we can get a little bit of money and still be upset, because the system is failing the ecosystem.”

Envy of the world

Before the pandemic hit, music advocates from other cities around the world would approach Austin music leaders “begging for the magic sauce and the keys to creating a music economy in their towns,” Cowan said. “We are the goose that laid the golden egg.”

When the South by Southwest Music Festival was canceled on March 6, it disrupted what Cowan describes as the complex ecosystem of Austin’s music economy.

“Tours go down, festivals go down, then it's just a cascade effect across the whole system, which is like unemployment, unemployment, the inability to restart,” he said.

Venues were then forced to close due to pandemic restrictions, with most laying off or furloughing all but a skeleton crew of staff. Cowan mobilized to create a program that provided H-E-B gift cards to workers who lost their livelihoods overnight, and along with Rebecca Reynolds from Music Venue Alliance Austin, he began advocating for the venues at the city level.

“Just after the announcement of the cancellation of South By, Cody and myself and others were invited into (Austin City Council) offices to talk about what the venue community was going to need from the city. And so, we were grateful for that invitation,” Reynolds said during the roundtable.

On March 26, City Council passed a resolution recognizing the devastating effect of SXSW’s cancellation and pledging to “develop programs to support Austinites that have been economically impacted by the public health crisis.” The resolution specifically cited small businesses, musicians and workers in the music industry as among those who would need assistance.

Reynolds said that, for four months, she and Cowan worked with City Council members and staff from the city’s music office “to figure out what a venue-specific disaster relief package would look like.” They went over fine details, like how much money was needed and the requirements venues would have to meet in order to qualify for the funds.

In April, the city and the Austin Chamber of Commerce requested a COVID-19 business impact study from the University of Houston’s Hobby School of Public Affairs. The study’s key findings identified live music as one of three industries “in the most dire straits today as a consequence” of the pandemic. (Restaurants/bars and hospitality services were the other two.)

The study predicted that more than half of Austin’s live music businesses would be forced to close permanently in six months or less, unless they received financial assistance from the government.

“I had several conversations with landlords on behalf of venues to say, ‘We're being assured that venue-specific disaster relief is coming. So please don't make any irreversible decisions or take any irreversible actions until this venue preservation fund comes online, because we're being assured that it's in the works,’” Reynolds said.

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But early aid programs the city developed were aimed at individuals, not businesses.

In June, local music leaders learned that the Better Business Bureau would be awarded contracts to administer a small business grant program and the city’s nonprofit relief grant program. They sent a letter protesting the decision to City Council, Mayor Steve Adler and leaders of the Economic Development Department. They were concerned that the local division of the bureau lacked experience administering grant programs and worried that conflicts of interest might arise, considering the bureau’s revenue stems from business and nonprofit membership fees. The music leaders suggested that Austin Community Foundation, an organization that awarded over $37 million in grants last year, should instead administer the program.

A backup document submitted for the June 11 City Council meeting says the city’s Economic Development Department selected the Better Business Bureau to administer the programs after evaluating third parties based on “their experience providing direct program delivery and administration assistance, including managing local, state, federal or private funding to assist in grant administration.”

Though city officials point to relief awarded to 28 music venues, it has not released a list naming the businesses that received aid through the small business grant program or the creative spaces program. On Aug. 20, the American-Statesman requested the names of the recipients and their award amounts but had not received the information from the city as of press time. How different businesses that host live music identified in their applications might vary.

Cowan said the results his organization has managed to compile don’t look good for Austin music. According to a city memo, Austin's timetable for pandemic relief programs through September does not show further music business-specific grants.

“It was a very slow and tragic realization to get to where we were a couple of weeks ago when we were told, ‘The money is all gone and we spent it on other things,’” Reynolds said.

The end of the road

A possible light at the end of the tunnel for music venues flickers in Congress, where the National Independent Venue Association, a coalition of more than 2,200 independently owned venues from across the country, has been pushing for a federal relief effort. Their hopes were bolstered in July, when Sens. John Cornyn, a Texas Republican, and Amy Klobuchar, a Minnesota Democrat, introduced the Save Our Stages Act. If passed, it would provide Small Business Administration grants to venue operators to cover six months of expenses. But Congress recessed in August, with the bill still on the table.

“Congress should be sued for breach of their fiduciary duty to the American people for recessing without passing any sort of meaningful relief,” said Bailey of the Mohawk. “If nothing is worked out with (Pandemic Unemployment Assistance), or with (a) moratorium on evictions or anything like that — that's it, you know, there won't be any other discussions.”

Even if the Save Our Stages Act passes this month, it is unlikely that funds will be available to venues before October or November at the earliest.

Cowan thinks that might be too late. “Landlords are feeling the pain on this, too,” he said. “They're not in a position to say, ‘You can't pay me the $30,000 in rent that you owe me. I can make that up,’ right? But the businesses don't have it, because there's no income.”

“Early on, we had several landlords who were willing to work with us and either prorate the rent out or reduce the rate,” Reynolds said. But without the promise of disaster relief money on the way, the tone of those conversations have shifted, she said.

“We're at the end of the road,” she said. “There is no new math that's going to be injected into the current situation. So those sort of ‘it's now or never’ conversations between landlords and tenants are beginning to happen more frequently.”

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For Reynolds, the situation is personal. Over the years, she’s watched venue owners pour blood, sweat and passion into spaces, and she’s galled by what she sees as the city’s “decision to let venues just wither on the vine” without acknowledgment of “what they have contributed to our family as Austinites,” she said.

“I'm currently having a conversation with a landowner and venue that is multiple decades old, a legacy venue, and the landlord has gotten an offer from Taco Bell. And I've asked them to hold off on making that arrangement with Taco Bell until we can get some better answers to keep that venue in that building. That's where we are,” she said.

If music venues fail en masse, it could fundamentally alter Austin’s character, which is “so inextricably tied to this story of music and cultural tourism,” Cowan said.

“No one's talking about it, but is South by Southwest coming back?” he said. “They took this year off. If they have to take next year off, which they likely will, what is going to happen downtown? What does homelessness look like in Austin? What does distressed downtown look like? What happens to office space and commercial real estate property values?”

There is a note advising attendees to “stay tuned for 2021 information” on the registration tab of the SXSW website. A representative from the festival told the Statesman on Monday that there are no updates about a timeline for next year’s festival but that they “hope to have something soon.”

“Even if you never stepped foot In a music venue in Austin, you benefit greatly from the fact that they exist and what they have done for our community,” Reynolds said. Over the past few decades, the music industry has driven hotel growth and cultural tourism and helped lure large tech companies to Austin.

“Even if going to the music venue isn't your thing, you benefit greatly from this venue being there rather than a Chili's or Applebee's or whatever,” Reynolds said.

Patsy Dolan Bouressa, director of SIMS Foundation, a nonprofit that provides low-cost mental health services to musicians, said that every time a venue closes, her organization experiences an increase in calls. Just like many music venues, the city has “denied all of our applications for assistance during this pandemic,” she said. The Red River Cultural District and the Heath Alliance for Austin Musicians also were denied funding from the Austin Nonprofit Relief Grant, although HAAM is appealing the decision.

The crisis among venues runs parallel to a crisis among the individuals who make up Austin’s music economy. “I'm seeing people who were making $1,000 to $1,200 a month in unemployment, dipping down to making $500,” Cowan said. (In late August, the city closed applications for a Creative Worker Relief Grant and an Austin Music Disaster Relief Grant. Both were designed to help individuals.)

Bouressa said she is watching the people who make up Austin’s music scene break down in real time.

“New clients are in crisis; our current clients are decompensating. We are hearing from clients that they can see now that the city does not care or support the music industry, so they are moving out of town,” she said. “Last week, I personally spoke to three longtime clients who are moving to New Mexico. I also spoke to another who moved to Boston.”

“It is absolutely shameful what is happening,” she said. “I 100% believe the city should remove the ‘Live Music Capital of the World’ moniker from all websites and materials.”