In striking contrast to the preferential treatment accorded Lollapalooza, neighborhood, non-profit and community music and arts festivals are having a harder time than ever navigating an inscrutable permitting process and dealing with increased city fees under the Emanuel administration, according to a group of two dozen festival organizers who convened at the Cultural Center on Monday to offer their input for the Chicago Cultural Plan 2012.

“It’s a Byzantine and quixotic process,” said James “Bau” Graves, executive director of the Old Town School of Folk Music, which has canceled the Folk & Roots Festival it has run for the last 14 years and replaced it with a new, much smaller event this summer. “ You don’t know what you’re going to get or when you’re going to get it.”

There is no set scale for fees or fines levied by the Chicago Park District, the festival organizers said, and no schedule for the permitting process. “You may not know about your ability to get the permits even two weeks before your event,” said Mike Reed, promoter of the Pitchfork Music Festival, by which point you’ve already sold tickets.

“The city is like a Mafia boss: They want their piece of the action, their protection money. It makes it very hard to start new events, or to keep old ones going. You can’t really grow anything anymore. When your festival is popular, bringing people to town should be the asset for the city. But for being good at what you’re doing, you’re being penalized.”

Representatives of Chicago Special Events Management, a firm that runs many neighborhood food, art and music festivals throughout Chicago and across the country, say that costs are significantly lower, the process is much less cumbersome and city government is immeasurably more supportive in other cities such as Palm Beach and Salt Lake City. Said the firm’s chief executive officer, Hank Zemola:

“Lollapalooza has created a false market for the value of talent here, but the biggest trend hurting us is that costs have skyrocketed for producing local festivals. The city used to supply electricity, towing, street sweeping”—all for a fee. “But that has been retracted, and that keeps increasing overall costs. Some of your unique, smaller events are going to perish. The overall vibe right now in the festival community is: Can we continue, and are these events still viable as fundraisers?”

The meeting was one of several “cultural focus groups” the city is convening as the next step in the much-ballyhooed process of compiling the Emanuel administration’s Cultural Plan, the first since Mayor Harold Washington in 1986. Then, there was “a major emphasis on public engagement,” with more than 200 community meetings seeking input before the old plan was written. This time, there will be about 30 as part of the “ground-truthing” effort—that’s consultant-speak for fact-finding—including the public community meetings that already have been held and a half-dozen smaller invite-only “sector sessions” such as Monday’s on festivals.

“An NEA study has revealed that festivals are the number-one way people are introduced to culture,” said Gail Lord of Lord Cultural Resources, the Toronto-based consultants compiling the “State of Culture Report” that will be delivered to the city on May 8, prior to the release of the final Cultural Report by the Chicago Department of Cultural Affairs and Special Events in the fall.

Lord, who ran the session with Chicago cultural consultant Amina Dickerson, seemed surprised by some of the frustrations expressed by those who attended. “Isn’t there an appeals process?” Lord asked as one participant after another expressed their difficulties in dealing with the city, especially the Chicago Park District. The group laughed in response.

Also represented at the session: the Chicago Humanities Festival, the African Festival of the Arts, the Hyde Park Jazz Festival, Expo Chicago, the Chicago Dance Festival, Broadway in Chicago and Chicago-based concert and festival promoters Jam Productions. Conspicuous in their absence: Any representative of C3 Presents, the Austin, Texas-based promoters of Lollapalooza, by far the biggest—and costliest—Chicago festival.

Other promoters made clear that Lollapalooza has had a significant impact on their events by tying up artists they cannot book because of C3’s especially harsh radius clauses and the intensified competition it represents for the live-music dollar. And they said the latter will be further complicated this year by Taste of Chicago beginning to charge for music, “so that now we also have to compete with the city itself,” as one promoter put it.

There are other new problems, too. For the first time, the Emanuel administration has canceled the policy of waiving city fees for things like vendors and street closures. In the past, with the support of the alderman and all or much of the income from a festival going to a community or charity group, the city declined to impose those costs on festivals. This year, all waivers have been eliminated.

For the Wells Street Art Festival, that represents $14,000 in new fees, Zemola said, and the charges even for small parish festivals will now be as much as $6,000 to $8,000 per event. “Churches and community groups are now asking themselves, ‘Why risk thousands of dollars to maybe make a few thousand dollars?’” he said.

Things will get even worse next year, when festivals will begin having to reimburse the reviled Chicago Parking Meters, LLC for some of the revenue it’s losing for the time the public streets hosting their now-privatized meters are closed to vehicular traffic and parking.

On top of that, “Chicago is no longer providing tie-in service for electricity,” Graves said, which means festivals will have to use noisy, unreliable and decidedly un-eco-friendly generators. But by far the majority of complaints were directed at the Park District.

Jam Productions’ festivals arm recently ran an event in Minnesota, and in comparison, “Working with St. Paul was a dream,” Xan Guzik said. “Getting the kind of cooperation we had there would improve things here so much. Here, the city fights you and throws obstacles in your way at every step. This city takes festivals as a burden more than anything.”

Except, that is, when it comes to flaunting them as tourist attractions. Chicago officials always are eager to draw the world’s attention (come back, G8!), but they sometimes forget that only happens by fostering homegrown talent and its showcases. “The mandate from the mayor is, ‘What is the balance between world-class cities and world-class neighborhoods?,’” Dickerson said.

“In terms of what festivals do for Chicago on the international stage, I don’t think it’s quite the global city it deserves to be,” said Lou Raizin, president of Broadway in Chicago. “We need a jazz festival on the scale of Montreux or a theater festival on the scale of the Fringe in Edinburgh—something that local people can rally around and love, but which can be a major economic driver.” International visitors spend 10 times the amount on cultural activities during a trip to Chicago that residents here spend, he added.

Yet balance is key, especially with the need to assure that events which are national or international in scope—like Lollapalooza in the music world—do not overshadow or have a negative impact on the existing cultural infrastructure.

“This is not a panel about tourism,” said Stuart Flack, executive director of the Humanities Festival. “People do not travel here for the Humanities Festival.”

Despite the many hassles, several of the promoters concluded that there are some cultural benefits that only a festival can provide. “All of the weird stuff—the surprises—can be consciousness-altering,” Old Town’s Graves said. “You can inflict guerilla art on the public, from the perspective of somebody trying to nurture artists and traditions that aren’t in the mainstream, or bringing sounds that usually take place in closed ethnic environments into the public arena.”

“Festivals should say to people that it’s very possible to be an artist here in Chicago; you don’t have to be in New York or L.A.,” said Pitchfork’s Reed. “Hopefully, they build on the larger idea that Chicago always is trying to be a better cultural community.”