Artspace and IFF: Teaming up since 2011 to increase affordable housing options in the Midwest April 3, 2019

“Communities reach out to Artspace because they’re looking to solve a problem,” says Heidi Zimmer, Senior Vice President of Property Development at Artspace, the nation’s leading nonprofit developer of live/work housing for artists with low incomes. “In a place like New York City or Seattle, they’re losing their artists because there’s no affordable housing. In other ‘Main Street America’ communities – like Elgin, Illinois, or Dearborn, Michigan – they know that where artists and creatives live, sustainable development often follows.”

IFF shares Artspace’s commitment to strengthening communities. The two organizations’ relationship goes back to 2011, with IFF playing a supporting role of lender, real estate consultant, or both. So far, IFF has helped back four major Artspace projects that will ultimately yield more than 200 affordable homes for artists and their families in three Midwestern states: Illinois, Michigan, and Minnesota. Like all Artspace projects, they began with an invitation from the community, followed by extensive research on Artspace’s part to determine whether an Artspace building might be a good fit for the community’s needs.

The economic challenges artists face vary wildly. But the struggles for many are real. For example, 60% of the 1,016 visual artists who responded to The Creative Independent’s 2018 income survey reported earning less than half of the average American household.

In addition to providing housing for artists in lower income brackets, Artspace projects frequently involve rehabbing historic buildings. “I love what Artspace does for the built environment,” says Stephanie Socall, IFF’s Director of Lending for Affordable Housing.

Zimmer is equally appreciative of IFF. “Not every CDFI [community development financial institution] takes on the kind of risk – albeit smart risk – that IFF is willing to absorb,” she says. “We’re both filling a big void where the market just isn’t.”

Dearborn’s City Hall Artspace Lofts: affordable, beautiful, communal

The City Hall Artspace Lofts project in Dearborn – a stunning 2016 renovation of Dearborn’s historic City Hall and one of the four Artspace projects IFF helped finance – exemplifies the impact an Artspace project can have on artists and the broader community in just a few short years.

“Living here takes tremendous stress off of me,” says resident Madonna Gauding. “Yes, the rents will go up, but it’s tied to the county median income, not whatever the landlord wants to charge.”

Gauding is a writer, book and website designer, and fine artist specializing in illustration and collage. Before moving into an Artspace apartment, she’d been on a waiting list for a year and a half to enter a 55-and-older community in nearby Ypsilanti. But when the owner suddenly changed how the building was financially structured, shifting from affordable to market-rate housing, Gauding wasn’t sure where to turn.

“One night I was so discouraged,” she recalls. “I put ‘artist’s housing’ or something like that in Craigslist. And boom – Artspace comes up. And it’s a not-for-profit developer. So, I applied and about three months later I moved in. It felt like a miracle.”

In a place like New York City or Seattle, they’re losing their artists because there’s no affordable housing. In other ‘Main Street America’ communities – like Elgin, Illinois, or Dearborn, Michigan – they know that where artists and creatives live, sustainable development often follows.”

Gauding’s miracle includes practical perks like “hot water any time of the day or night,” extra square footage to accommodate her art practice, access to public transit and a grocery store, and concrete floors “you don’t have to worry about ruining.” As part of the old Dearborn City Hall campus, it also features eye-popping 15-foot ceilings and 5-by-12-foot windows that provide a view of treetops and clouds.

Sculptor Carl Goines, a former resident and father of three, was so taken with Artspace and the community development work of artists like Theaster Gates that he moved out to build his own communal living space for artists in Detroit. Like Gauding, Goines appreciated the City Lofts’ sheer beauty and usability.

“It was just a really gorgeous space that felt very welcoming, a safe place for me and my children,” he says. “When we were there, we had an amazing loft and a great deal of space – we weren’t all over each other with my sculptures in the middle of the living room.”

We had an amazing loft and a great deal of space – we weren’t all over each other with my sculptures in the middle of the living room.

Then there is the creative community just outside residents’ doors, which invites collaboration and friendships. The complex includes 53 live-work units for fellow artists – from hairstylists and tattoo artists, to musicians and actors, to more traditional visual artists like sculptors and painters – as well as “pocket galleries” sprinkled throughout for informal readings and workshops and a 19,500-square-foot commercial area currently being developed for non-resident-artist studios and arts organizations.

“It’s not a normal apartment building – it’s designed to be a community,” Gauding explains. “I’m not saying everything goes smoothly all the time. But you’re surrounded by people who are trying to live a creative life – people who are making things, doing things, putting things up on the walls in the hall. It’s inspiring.”

Kimberly Moore, the Artspace asset manager who helps oversee the City Hall Lofts, also points to the campus’s contributions to the broader Dearborn community, including:

  • Live-work space for the nearby Arab American National Museum’s artist residency program. In addition to housing Ford’s world headquarters, Dearborn has the largest Arab American population in the United States. The City Hall Lofts are proud to help support a cultural pillar of the community – and country.
  • Bringing together funders and community partners in creative ways. For example, Artspace recently received funding through the Ovation Network’s “Stand for the Arts” initiative, in partnership with Comcast, to build an on-site art and tech lab. Working with the Ford Foundation and the Dearborn Community Fund, Artspace extended use of the space to high school seniors for an annual public art project called Pockets of Perception, which has been operating for four years but previously didn’t have a permanent home.
  • Hosting the City of Dearborn’s summertime “Jazz on the Ave” festival on the campus’s grounds. “People just bring their lawn chairs, there’s a band and stage, and everyone enjoys the music,” Moore says.
  • Hosting “open studios” during the holiday season. Dearborn residents can browse and shop, supporting Loft residents’ art in the process. According to Moore, “A lot of people don’t realize that artists are small businesses that contribute to the creative economy.”

For her part, Gauding is helping organize Dearborn’s annual Gallery Rally, which will feature 10 different artist venues (including the City Hall Artspace Lofts). “I’ve somehow become very involved in the community, in a way I never imagined,” she says.

“It’s not just about the footprint of our project,” Moore adds. “It’s about the broader community.”


The loan that ‘kind of blew my mind’

“I don’t think [the City Hall Artspace Lofts in Dearborn] would have been able to be built without IFF,” Zimmer says. “Of all the projects we’ve worked on together, that one kind of blew my mind.”

Traditional lenders just don’t make those kinds of loans.”

When Artspace purchased the Georgian-Revival-style Dearborn City Hall in 2014, part of the financing included a grant from the City of Dearborn. The grant came from a tax obligation that the City was still owed from a local steel company through a promissory note. The $1.4 million was to be paid by the company to the City, but with a third party involved, the timing was problematic.

“We had to close on the project before that transfer was going to take place,” Zimmer explains. By providing a bridge loan, IFF advanced the amount of the promised grant, enabling construction to start on time. “Traditional lenders just don’t make those kinds of loans,” Zimmer adds.

IFF also provided a loan to Artspace to enable work on the City Hall Lofts’ commercial space, which connects the campus’s two buildings used for housing.

Other sources of funding for the project were:

  • $8 million Low Income Housing Tax Credit (LIHTC) and $2.275 million Historic Tax Credit equity investments from Bank of America Merrill Lynch
  • $500,000 grant from the Ford Foundation
  • $500,000 in Federal HOME Funds allocated by the City of Dearborn
  • $485,000 from the East Downtown Dearborn Development Authority and other private donors
  • $400,000 City of Dearborn brownfield redevelopment loan
  • $400,000 of developer equity

As City Hall Artspace Lofts resident Madonna Gauding acknowledged, “When you move in, you don’t realize all of the work it took, all of the financing and grants, so that we could live here. I’m very grateful.”

Meanwhile, in Waukegan, Chicago, and Minneapolis …

Every Artspace project has a different set of challenges, solutions, and partners. IFF’s contributions over the years have included a range of loans and real estate services supporting:

  • The Karcher Lofts in Waukegan, Illinois. IFF provided a $700,000 loan for the Karcher Lofts, which Artspace completed in 2012. The project entailed rehabbing and converting a historic hotel into 36 live-work units with open floor plans, uninterrupted “gallery walls,” plenty of natural light, and views of Lake Michigan for artists earning 30-60% of the area median income. Other funding sources included a LIHTC equity investment from Raymond James, Federal HOME funds allocated by Lake County, and City of Waukegan funding.
  • The Pullman Lofts in Chicago, Illinois. Chicago’s Pullman neighborhood is unlike anywhere else in the country – the first planned industrial community in the United States and the only urban National Monument. IFF’s real estate consulting arm shared its expertise in local affordable housing development to help Artspace and Chicago Neighborhood Initiatives put together a winning tax credit application to rehab two historic buildings and develop one from the ground up, which will create a total of 38 affordable housing units for low-income artists. Artspace’s application was successful on the organization’s first try, which was unusual given that Illinois only has credits to fund about 20% of annual demand. IFF also provided a bridge loan to help close a funding gap between the project’s construction closing and the finalization of its financing, as well as an additional loan of $750,000. Other partners and funders include PullmanArts, US Bancorp CDC, the Chicago Community Trust, the Federal Home Loan Bank of Chicago, the Gaylord and Dorothy Donnelley Foundation, and the Richard Driehaus Foundation.
  • The Northside Artspace Lofts in Minneapolis, Minnesota. IFF provided Artspace with an early-stage predevelopment loan of $750,000 to help cover the survey, architect’s plans, and other costs involved in scoping the Northside Artspace Lofts. The project will utilize tax-exempt bond financing and LIHTCs. Construction isn’t yet under way, but the building will ultimately provide 100 units for artists earning 60% or less of the area median income. Other partners include Juxtaposition Arts and Wellington Management.

In thinking back on the Artspace-IFF partnership, Zimmer says: “The best thing about IFF is its flexibility. They are in a field of their own in terms of helping nonprofits like ours advance our mission and move our projects from A to B.”