Graffiti, Economics, & the Law
11 July 11, 2013
Law & Economics
“They butt into your life, take a cheap shot at you and then disappear…They make flippant comments from buses that imply you’re not sexy enough and that all the fun is happening somewhere else. They are on TV making your girlfriend feel inadequate. They have access to the most sophisticated technology the world has ever seen and they bully you with it. They are The Advertisers.” (1).
In Dalston, London in 2009, Hackney Cooperative Development was the lienholder for the newly opening Gillett Square. To the excitement of HCD, Banksy somehow already hit it with two entertaining murals. The first is an image of a young kid with a teddy-bear, a blingy necklace, and a ghetto-blaster boombox. The second one is tucked away out of plain sight and is an image of a mohawk punk looking through an IKEA parts box labeled “large graffiti slogan-” a commentary on mindless vandalism and pseudo-intellect. Hackney Cooperative Development began a lengthy process to have the work protected, but on the eve of the opening of the square, the Hackney Council (local government) clean crew jet washed the first piece. HCD threatened with a lawsuit if they buffed the second piece (which they had accidentally missed). While the council discussed the fate of the next piece, it was vandalized by ugly tags beyond recovery.(9). Important questions to ask at this point are: Was there real damage? How much? Was the considered damage due to neglect of the Hackney Council? Was there neglect on the part of HCD?
Was There Real Damage?
The Hackney Council’s decision to remove the Banksy from the Gillette Square cost them a significant amount of money. How much? It is difficult to measure what might have been in an area that has only recently been developed. However, we can look at other sites where Banksy has hit. Here is letter sent to Banksy:
“I don’t know who you are…, but I am writing to ask you to stop painting your things where we live... My brother and me have lived here all our lives, but these days… neither of us can afford to buy a house where we grew up... Your graffities are undoubtedly part of what make these wankers think our area is cool. You’re obviously not from around here, and after you’ve driven up the house prices, you’ll probably just move on. Do us all a favour and go do your stuff somewhere else like Brixton. -Daniel” (1).
If you don’t live in England, it may sound like “Daniel” is giving too much credit to one mindless vandal. However, a little investigation into Banksy’s impact on a community may be surprisingly enlightening. According to The Telegraph news, Liverpool’s Whitehouse pub went from a value of £475,000 to a million pounds after Banksy left his mark. Not every property is worth mentioning, as the list is enormous, but a few properties that have made the news have increased in value by £40,000 on the low end, and just as many on the upper end have gained ten times that.
The instance with the best coverage would be in Banksy’s hometown of Bristol, in the United Kingdom. In 2009, the Financial Times covered estimations by the Bristol city council, which found that Banksy’s art alone increased the local economy by nearly 15 million dollars over a period of 12 weeks, and that the gain in community morale was even greater than that. To see where the council is coming from, during the 12-week period 300,000 people visited his exhibition boldly deemed “Banksy v Bristol Museum.” That is about as many visitors as the museum normally has in an entire year. Lines to see his work backed up six hours long. Businesses in the vicinity all reported an increase in trade, some doubling their turnover. (4). How many cleanup crews have done that for a neighborhood? You can imagine that the building owners wouldn’t be terribly distraught that they’ve been “bombed” by a world-class artist. Personally, I don’t have to imagine. I went and asked one.
I made an impulse weekend visit to San Francisco. After getting directions from the owner of the Anarchist Bookstore on Haight Street, and then the bouncer at a nearby club, I found a piece by Banksy above the fine restaurant E’ Tutto Qua. It was hard for me to find in the dark, but some random people showed me where I could view it from. I wanted to see it up close, so I spoke with the restaurant owner. He seemed particularly pleased that I’d noticed his piece and offered to take me up on the roof to take pictures. It seemed like he did this all the time, almost like he was the owner of a Lamborghini, and I asked for a ride; a Lamborghini given to him anonymously and free of charge.
How Much Damage was there?
To assess the appropriate settlement amount, we must first assess losses to Gillette Square and HCD. According to the GillettSquare.org.uk website, Gillette Square is meant for the performance of visual and performing arts, and for the collaboration and management of events. HCD is a not-for-profit community economic development organization. They fund Gillett Square activities and business-help programs with revenues from renting suites out to offices and to a jazz club. Not having the Banksy allows business to have decreased rent (currently at £665 for a 337 square foot office), although lower rent means that there is that much less funding for community and business-help projects. So regardless of the fact that Hackney Cooperative Development is supposedly not-for-profit they should still pursue the city for damages.
It’s worth noting, first of all, that England has a common law system, and that this case is over a breach of tort duty. As such, the plaintiff would seek special (compensatory) damages, which would put Hackney Coop as well off as they would have been had the city not buffed the piece. Special damages would cover the economic loss from foregone rent revenue over the professional life of the offices. The damages resulting from the vandalism of the second piece are taken into account because neither party is liable for its destruction. If it had been discovered that HCD had finished their application for artistic protection, and if that protection included a Plexiglas covering, then there may be a case for neglect on the part of the Hackney Council. However, that is information we don’t have, and it’s unlikely that the city would actually be so liable. There may be a question asked as to whether or not it is significant that HCD made no investment into their property value increase. The answer is, no. The amount invested is not relevant to the damages done.
According to the American Society of Civil Engineers, investments in an office building should be made with an assumed 50-year service life. There are no studies on comparable rent effects that have been made public that could be used in this evaluation, but an increase in business rent prices can be expected to rise by a conservative estimate of 30%. While the value of painting adds to property value, it is the resulting foot traffic and tourism that drive up the rent prices. Assuming a steady popularity of Banksy’s work, which would’ve attributed to the popularity of Gillett Square as arts venue, and consequently, maintained the value of the area, the economic damages can be calculated.
Ellison, the CEO of Hackney Cooperative Development, created a presentation deck showing that the Square currently has about 80 tenants, and the building is worth about £6 million. If we multiply the number of tenants by 30% of the rent rate, we get a rough estimate of foregone earnings per month:
80*(£665*.3)= £15,960=Monthly Loss, or £191,520 per annum, or £9.6 million over the course of 50 years.
If we factor in present value, with k=. 5%% n=50 years PMT=£191,520 annually, using the following present value formula:
Present value is about £8.454 million.
In itself, a mural may have more or less value than a like canvas piece. The same week of the case at hand, a similar Banksy piece sold for £100,000, so this is the best measurement available for the value of the piece itself.
So having measured the economic damage and property (painting) damage, the city of Bristol should pay Hackney Cooperative Development £8.455 million, in order to bring them back to same level of utility. By doing so, HCD will be indifferent as to having the money, or the art.
Was Hackney Council Negligent? Was HCD?
The English city of Bristol is home to nearly half a million people, a (formerly) zero-tolerance graffiti squad, and Banksy. In the last decade, there have been a few lawsuits from individuals who had Banksy’s work on their walls buffed, stolen (by having the whole layer of the wall taken and sold at auction) or vandalized; and several more threats to sue have been made than carried out. The English academic community has argued that murals by Banksy are a piece of British heritage. In 2006, after so much controversy, the City of Bristol held a poll before buffing a mural, Banksy had painted on a blank wall, overlooking a busy street. An incredible 93 percent of 250 neighborhood participants voted to keep the piece (2). In true English fashion, this set a precedent for all other pieces by the Earth’s favorite vandal, Banksy.
In defense of the Hackney Council, graffiti squads are not culture and art critics. They are professional wall-cleaners, and the city had a zero-tolerance graffiti policy. So unless Hackney Cooperative Development made some kind of move to formally protect the painting, they have no case. Well, they did.
HCD applied to have the painting protected as a non-advertisement mural. As mentioned in the presentation of this case, however, the process took long, and the cleaning crew was too fast. So, as the victim was not negligent, the injurer in this case would be liable. To remove themselves from a position of liability, the Hackney Council should have asked first before removing the graffiti.
So, What Actually Happened?
The Hackney Council awarded the Hackney Cooperative Development an undisclosed amount. From what has been calculated, £8.454 million would’ve been about right. In addition, the council made a policy change where property owners would be asked before having their walls buffed- exceptions being made for obscene or unapproved advertising. While the public information about the settlement is vague, it seems that the right action was taken. At the present time, Gillett Square is low on funding and isn’t putting very much money toward events at the Square. If in fact the Council did pay HCD the correct amount in the settlement, the loss of the Banksy should have had no negative impact.
Banksy. (2006). Wall and piece. London: Century.
British Broadcasting Company. (2 November 2009) Banksy mural defaced during vote (online).Retrieved from http://news.bbc.co.uk/2/hi/uk_news/england/london/8338335.stm
Daily Mail Reporter. (22 August 2011) Banksy’s graffiti is part of the nation’s heritage and deserves protection by law, claim academics. Daily Mail. http://www.dailymail.co.uk/news/article-2028715/Banksys-graffiti-art-protected-law-say-Bristol-academics.html
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ICLR. (6 March 2013). Banksy under the hammer: graffiti and the law. The Incorperated Concil of Law Reporting for England & Wales. “Points of Law.” London Evening Standard. (5 march 2009). Battle to stop new Banksy from being destroyed. http://www.standard.co.uk/news/battle-to-stop-new-banksy-being-destroyed-6867249.html
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