By BOB OLIVER
DEARBORN – With only a few more weeks of waiting before receiving either an acceptance or rejection of its application for low-income tax credits from the Michigan State Housing Development Authority, Artspace is preparing for the upcoming decision.
Artspace, a Minneapolis-based nonprofit real estate developer, signed a purchase agreement for the city hall complex in July and plans to renovate it to create 46 work and living spaces for artists as well as spaces for art studios, art organizations and creative businesses. It has many similar properties throughout the country, but this would be its first in Michigan.
“We submitted the application by the August 15 deadline, so we are hoping to hear back around the middle of November,” said Heidi Kurtze, Artspace vice president of Property Development and the leader of the project in Dearborn. “If the credits are granted, we can move toward having a June 1, 2014, groundbreaking. If not, we can re-apply in February, which would push our plans for groundbreaking back by about four months.”
Kurtze said Artspace has been turned down many times on the first application for tax credits, but that it has always re-submitted applications and has never had to walk away from a project because it was denied credits.
“There is a lot of competition for these tax credits,” Kurtze said. “But we’re cautiously optimistic about our application. If we were to be turned down on the first application, our plans would not die. We are very dedicated to this project.”
On the MSHDA application Artspace submitted in August, it asked for $6.9 million. If approved, the money could only be used for converting rooms to lofts in the east and west wings of the complex because the money can only be used for housing. Other repairs needed at the complex would have to be paid for by Artspace or through donations from outside sponsors.
Another source of income for the renovations could be Severstal North America, which has offered $1.45 million to develop the concourse and $345,000 for Artspace’s development costs as part of an $8.5 donation offer to the city for the project and the moving of city operations. In return, it would receive naming rights in the project.
Renovations to the city hall complex are expected to take 12 to 15 months with a total cost of roughly $16-17 million for the project.
The city council approved the sale of parts of the city hall complex “as is” for $1.65 million in July, the price the complex was appraised at. A non-refundable deposit of $50,000 was submitted with the signed agreement for the purchase, with the guarantee from Artspace that the exterior of the building would not be changed.
There are also two rules included in the contract which would revert the property back to the city if they are not followed. In the first, Artspace or its affiliates must remain owner and continue to use the building for 30 years and in the second, the project must be completed within two years from the date of closing.
The sale did not include city hall park or the city-owned parking lot south of John Nagy Drive. The war memorials and statue of former Mayor Orville Hubbard in the park would be moved to the Dearborn Administration Center (the old ADP building) at 16901 Michigan Ave., which is where the city is expected to move its operations. City officials estimate that the move would save the city $400,000 annually.
In August, the council voted to amend the city ordinance to allow artist lofts in city hall and to approve the East Dearborn Downtown Development Authority’s Community Revitalization Plan and authorize Mayor John O’Reilly Jr. to sign an associated letter of support for the Artspace project.
O’Reilly said the EDDDA’s revitalization plan includes a summary of their projects that the city has already approved and describes how Artspace will fit into the economic development of the city into the future.
A topic of discussion throughout the city for most of the year, the sale of the complex was not something that Kurtze said Artspace took lightly.
“We understand that this is an iconic structure and that it has a lot of meaning to the community,” Kurtze said. “We are very respectful of that and can assure the community that the building and complex will be very well cared for.”
Kurtze added that she hopes community members will consider the track record of Artspace when forming an opinion of the project in Dearborn.
“This is not our first project, we’ve been around for a long time,” Kurtze said. “We have a long history of successful low-income tax credit projects. Every community in which Artspace has entered into a pre-development contract with has a project either in operation already, under construction currently or they are in a pre-development phase.”
Artspace has been in business for more than 30 years and has 33 sites in 13 different states. It also has 12 other projects in development besides the one in Dearborn.
Kurtze said she is excited about the possibilities that would arise from having an Artspace in the city.
“This will really be a benefit to Dearborn,” Kurtze said. “It will really make the area open and vibrant and allow people to participate in an area that is so diverse, both demographically and artistically. This is a very creative hub and we believe the right pieces are in place to make this a very successful project.”
(Bob Oliver can be reached at [email protected])