It would be interesting to know the thoughts behind the decisions on where the money is spent.
I have to agree with you that since your city represents itself as an Art Community, that lots of the public art is not by local artists.
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I expect a fair bit of the thinking has to do with most of the city revenue being from tourism and visitors, so "we make it pretty for them, at the expense of local residents."
Of course, the city council is heavily represented by people who own business that caters to tourism, as well. It seems like it is always "about the money," in some way.