Preliminary Feasibility Report

Transcription

1 Preliminary Feasibility Report Asheville, NC August 2017 Prepared at the request of The Center for Craft, Creativity & Design in partnership with the Asheville Area Chamber of Commerce

2 Artspace Projects, Inc. Offices 250 Third Avenue North Suite 400 Minneapolis, MN Denver Los Angeles New Orleans New York Seattle Washington DC F 612 / 333 / 9089 Artspace Projects Around the Country Top to Bottom: First residents at the Artspace Tannery Lofts in Santa Cruz, California; Residents in El Barrio s Artspace PS109 in East Harlem, New York; Interior of a live/work unit in the Northern Warehouse Artists Cooperative in St. Paul, Minnesota; Grand Opening of the Brookland Artspace Lofts in Washington D.C.; Exterior of City Hall Artspace Lofts in Dearborn, Michigan.

3 TABLE OF CONTENTS Executive Summary 5 Findings Overview 6 Recommendations 13 Community Profile 14 Qualitative Findings 19 Project Concept 19 Artist Market 21 Funding & Financing 25 Site Assessment 31 Local Leadership 44 Sustainable Community Impact 45 Recommendations and Next Steps 47 Appendices I. Acknowledgments 49 II. Site Matrix 51 III. Arts Market Study Overview 53 IV. Asheville Document Review 54 V. PFV Questionnaire Results 56 VI. Path of an Artspace Project 60 VII. About Artspace 65 Cover pictures: Artspace site tour, Source: Artspace CCCD Made Event, Source: Jennifer Cole Rodriquez Chicken Mural, Source: Mike Marcus

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5 EXECUTIVE SUMMARY The Center for Craft, Creativity & Design (CCCD) in partnership with the Asheville Area Chamber of Commerce invited Artspace, a national nonprofit real estate developer of affordable space for the arts, to conduct a Preliminary Feasibility Visit. The purpose was to preliminarily identify and evaluate the potential for long-term affordable space solutions for Asheville s creative sector and to recommend next steps. The Preliminary Feasibility Study, is a process created by Artspace to respond to communities seeking their own Artspace live/work, mixed-use-model development. Initially an Artspace development screening process only, it has evolved over the years into a tool for advancing a community vision without regard to the project concept or who the developer of new space may be. Information is collected during a community visit consisting of a series of focus groups, community meetings, and site tours. Relevant city planning documents are reviewed. Artspace uses its thirty plus years of knowledge as a practitioner in the field, including regional experience, to make its recommendations for next steps. The study methodology is qualitative and focused on six areas: Project Concept Arts Market Funding/Financing Potential Sites Local Leadership Sustainable Community Impact More information about the Core Group, Acknowledgments, and Artspace s methodology can be found in Appendix I. Artspace Preliminary Feasibility Visit, Asheville Live/Work Housing Defined Space that meets standard residential codes (or a local live/work, or work/live ordinance) and is somewhat larger than a typical dwelling unit. In an Artspace developed project sizes typically range between sq. ft. for an efficiency and up to 1,400 sq. ft. for a 3-bedroom unit. The space is designed flexibly, incorporating both wide open areas and private rooms, to allow artists and others working in creative fields to arrange and adapt their living and working environment in a way that best suits their artistic/creative and family needs. Durable surfaces allow residents to create in a variety of mediums anywhere in the space. Artist-friendly design features, amenities and management policies are adopted. 5

6 Findings Overview The lack of affordable space for the creative sector is a significant concern of the artists, makers, craftspeople and cultural leaders of Asheville. Creating affordable housing of all types, is a pressing objective of the City of Asheville. Further, the City and its community leaders recognize the economic and intrinsic value of the arts to the region s identity and over-all health. Therefore, retaining the creative sector in Buncombe County broadly and in Asheville specifically, is very important to the local stakeholders with whom Artspace met. These concerns and objectives converge to confirm what many in the community already hypothesized, that an affordable artist, live/work, mixed use facility should be explored as a priority creative space development model in Asheville. This model is the recommended Project Concept to test in a next phase of feasibility and predevelopment. That confirmed, the next task is to begin answering the following questions: How deep is the market and what can artists and cultural organizations/creative businesses pay for the types of spaces they need? Are there potential sources for predevelopment and capital funding? Are there acquisition or long-term land lease options that would serve a project? Is the local leadership in place to see a project through? How can a project have the most impact? Are there complementary strategies, initiatives or policies that if adopted locally, could further the goal of affordable and appropriate space for the creative sector? Five of the outlined areas of focus were investigated to confirm the Project Concept, and seek insight into next steps, key themes from each focus group are highlighted. An overview of findings relating to each area of focus follows: KEY THEMES Cultural Leaders Focus Group A lack of affordable housing and an imbalance of salaries to cost of living, make it difficult to recruit cultural leaders and workers to Asheville. There is a creative drain as artists move outside the City of Asheville, in search of affordable space. A new facility would help to centralize creatives and cultural activity offering an opportunity for beneficial synergy. The arts have led regional transformation and are critical to Asheville s identity. Historic racial tensions and inequities have left an open wound in the community. A new initiative must help heal and not divide. 6

7 Arts Market A market study would bear out how many live/work units would be supported, but based on early conversations with the creative sector and factoring in a 4% Low Income Tax Credit funding strategy, 80 units of affordable artist live/work units is a reasonable concept to test. Fewer than 80 units will be more difficult to achieve with this funding scenario. Up to 10,000 square feet of rent-able space for nonresidential/commercial uses (e.g. studio, incubator, exhibit space) could be also be tested to fill out the mixed-use project concept. If a comprehensive market study reveals demand sufficient for a mixed-use facility as described, a large-scale single facility (likely over 120,000 square feet) or an equivalent amount of space in several small-scale locally created developments scattered throughout the city, would be scenarios to consider. The funding sources for these two approaches would vary significantly. A market study should test the assumptions that were formed during the course of this study, including a strong need for: Private studio space Commercial space for small creative businesses Co-working space for culinary artists/craft foods Incubator space for start-up creative businesses Shared specialized studios (e.g. makerspace) Artist-in-residency space Short-term rentals for the performing arts Spaces that provide exposure and interaction with the public (e.g. exhibition, storefront retail) *Note that a project having a significant amount of working studio space and space for arts organizations and creative businesses could be a contender for New Market Tax Credits (NMTC) as a key funding source. But the market research will need to reveal strong need and capacity for those interested to take on new space. KEY THEMES Artists and Arts Organizations Focus Group Work spaces and housing are not only becoming unaffordable, but many are simply being lost to conversions and other short-term, non-arts uses. Many of the creatives (1/3rd of those represented) are making a majority of their income from their art, but the increase in cultural tourism in the RAD is not as beneficial to artists as is broadly perceived. Asheville s growth and related changes is driving away artists who were attracted by the low cost and quieter do-it-yourself creative community. Real estate costs now prevent creatives from buying buildings and making spaces affordable to other artists. 7

8 Based on information collected during focus groups and a community meeting, it is presumed that the following rents would be considered affordable to many seeking new space: Live/work space rented at or below $750 per month Private studio space rented at or below $450 per month Non-residential creative space that is $1.00 or less per square foot While affordable rental live/work space will likely appeal to most creatives in need of housing, there are other models that based on information collected during this survey, should be tested, including: Housing-only or micro-housing with access to shared creative spaces (rental) Live/work space affordable to those qualifying at 80%-120% of area median income (AMI) as well as market-rate options (rental). A mixed-income project concept may also help financial feasibility so the need is important to quantify. Live/work purchase options (e.g. condominium) Creative sector location preference should also be tested. While many factors influence where new space may be built, understanding where artists/creatives and cultural leaders prefer to have their housing, creative work and business spaces located is important. The site recommendations found in this report prioritize a multi-use facility in the River Arts District. However, a comprehensive survey may reveal different creative sector priorities. Because multiple new space developments or initiatives could emerge to address the variety of creative space needs, a location preference question in a future survey could reveal information useful to multiple property owners, developers and stakeholders. Funding and Financing In order to develop space that can be rented at rates described as affordable in the Arts Market section of this report, substantial subsidy is required. Residential and commercial space subsidy can either be on the front end which is preferable (e.g. Low-Income Housing Tax Credits (LIHTC), Historic Tax Credits (HTC), Housing Trust Fund (HTF), or on the back end in the form of an operating subsidy. A mixed-income commercial arts facility project like Artspace s Traffic Zone Center for Visual Art is an example of a selfsustaining, operating subsidy-only model in which commercial market-rate rents are sufficient to subsidize other rents in the facility 1. A 4% Low Income Housing Tax Credit mixed-use project funding model can combine front end and back end subsidy, by introducing market rate housing and commercial uses. Both of these back-end subsidy strategies risk becoming unstable if market rents fall substantially or significant vacancy is experienced. A development Pro-forma that tests multiple funding models would be useful once Arts Market Study findings are revealed, a priority site confirmed and a concept more refined. The capital financing stack for an affordable artist, live/work mixed-use facility that relies heavily on front end subsidy will vary depending on factors including: the mix of space types in a final project concept; size and location of the project; cost of acquisition/site control terms; whether the facility is built as new construction, adaptive reuse or renovation of an historic building; and, funding/financing program objectives and related criteria that may change from year to year. 8 1 Artspace s Traffic Zone Center for Visual Art is an example of this model. A 100% commercial building, market rate commercial rents subsidize artist studios. The success of this project hinged on a low purchase price, low interest debt, philanthropy, tenant financed improvements, artist tenant equity, and a commercial market that grew favorably over time.

9 Possible sources of funding for a mixed-income and mixed-use project include: A 4% Low Income Housing Tax Credit (LIHTC) and Tax-Exempt Bond Award from the North Carolina Housing Finance Agency. This resource would cover approximately 30% of the housing-related costs and make live/work space affordable to households qualifying between 30% and 60% of the area median income (AMI). The City of Asheville Housing Trust Fund, bolstered with $10 million in new bond funds targeted for affordable housing would help to fill the gap. A mixed-income housing project would likely seek the full $1 million maximum per project award 2. This award would cover a portion of the gap financing required. Additional sources would need to comprise over 50% of the development cost. This is challenging gap compared to many other states in which Artspace works and is due in part to the North Carolina imposed $6,000 per unit credit cap for the 4% LIHTC program. Many sources will need to be maximized and pooled to fund a project in Asheville. Potential sources and strategies identified during the course of this study include: Federal Home Loan Bank (FHLB)/Affordable Housing Program (AHP), HOME, Community Development Block Grants (CDBG), HUD or Fannie Mae/Freddie Mac debt financing philanthropy, private residential and commercial lending, deferred developer fee, zero or low-cost land acquisition /site control, and property tax and fee reductions. Feasibility may hinge on a unique funding scenario like using a Federal Historic Tax Credit eligible building, in order to access additional equity. It may also require a larger project with the income from the market rate units used to support a larger than traditional mortgage. Or, New Market Tax Credits (NMTC) can be explored if the market study reveals a significant need for working studio, arts organizations and creative businesses and an argument can be made for the job creation and economic impact of the project. It is an anticipated that $4.9 to $8.6 million in non-traditional resources will need to be identified (e.g. philanthropy, TPDF, operating subsidy from market rate creative commercial space, etc.) Each of these potential resources and incentives would be explored fully during a predevelopment phase of work. A development pro-forma that considers the final project concept including: type and number of spaces; construction type and location; site conditions; parking requirements; and, other cost influencing factors would be created at that time. Without that information, estimates are informed examples only. KEY THEMES Funder Focus Group Gr The City of Asheville is committed to achieving its affordable housing objectives as evidenced by a newly voter approved bond resource. Funds will help fill 4% LIHTC project gaps and make more property available for a diversity of housing types serving low-income populations. Even with dedicated local resources and incentives, funding a 4% LIHTC, mixed-use arts facility will be challenging. Philanthropic resources are not robust. Maximizing available funds and creating a project that fits multiple funding priorities is essential. Creative funding strategies and atypical partnerships may be the linchpin to a successful project. The Tourism Product Development Fund (TPDF) may be an ideal funding source for particular aspects of the project. The City of Asheville s recently approved affordable housing bond initiative also provides a timely funding. Finally, Buncombe County should be approached as the project continues to take shape. 2 Program details for new Housing Trust Fund (HTF) dollars have not yet been announced. A Notice of Funding Availability (NOFA) from the City of Asheville will need to be reviewed in a next phase of budget and Pro-forma development. 9

10 Potential Sites The Core Group was provided with general criteria Artspace uses when first evaluating potential sites/ buildings for future creative space facilities. The Artspace criteria was considered along with local development and civic leader priorities to finalize a sampling of publicly and privately held properties for Artspace to consider during the visit. It is not an exhaustive list. The goal during this preliminary evaluation phase is not to select a site, but to confirm that reasonable options exist; to better understand neighborhoods in the context of creative and community assets; and, to make recommendations for either eliminating options or keeping them in contention. The pros and cons of each site were considered and each was scored in an attached Site Matrix (see Appendix II), according to the following criteria: Location Size Conditions Zoning and land use Acquisition/Site Control Potential for sustained community impact Alignment with community priorities Other considerations The overarching finding is that multiple, good options exist for a mixed-use, live/work project for the Project Concept. Common characteristics of a good property include: Location is supported by the area s existing or pending infrastructure and nearby assets (e.g. walkability; within ¼ - ½ mile of public transit and amenities that serve residents; high visibility/accessibility to the public; and/or close to other cultural assets) A size that accommodates the vision and parking needs without requiring additional development partners Site conditions, zoning and land use regulations that are compatible with the project concept (i.e.: residential, commercial and light industrial uses). Additionally, the conditions, zoning and regulations will not result in excessive costs that cannot be mediated by dedicated funding sources. For example, renovating of an historic building costs more than a non-historic rehabilitation or new construction, but costs can be offset by Historic Tax Credit equity. Some environmentally hazardous conditions can be remediated with public funds for this purpose. Acquisition or long-term lease that is low-cost and an owner amenable to an extended (1-3 year) site control period. A site that is a priority for multiple community stakeholder groups, allowing sustainable community impact. For a site or neighborhood to be considered excellent and considered a priority, it must score accordingly in the site matrix exercise and have compelling characteristics that outweigh any site challenges. The River Arts District (RAD) site located at Riverside Drive is a priority consideration in spite of challenging site conditions. Retaining artists in the RAD weights the scoring for properties in this neighborhood because they offer sustainable community impact potential given the importance of this area as an arts tourism destination. Secondary to this site, is the Bartlett site. While these two sites are the number one and number two recommended priorities, it is still too early in the feasibility phase to conclude either is a perfect site solution. As feasibility and predevelopment efforts move forward these sites may be ruled out and others in the sampling moved-up. For example, there are other City of Asheville and UNCA Asheville sites, that are fine options to explore further. And still, other sites not yet under consideration, may come to light as new and better options for funding feasibility and the refined project concept. 10

11 Local Leadership Local leadership is an area of focus that is hard to quantify, but vitally important to a successful new facility development or space initiative. Leadership is considered in two parts. First is the local, regional and state civic leadership including elected or appointed officials and staff. Second is the private sector, including arts/cultural, business, education, nonprofit, philanthropic and broadly the area s community leaders. The most successful projects include a coalition of supportive leaders from both the public and private sectors. For this reason, Artspace highly recommends local communities form a Core Group made up of both. Artspace evaluates the capacity of local leaders to help move a project forward by considering how well the leadership pool is defined by the following characteristics: Elected officials who publicly voice support for an effort and are willing to prioritize a project for predevelopment and development resources including funding and site control. Support may also be shown through a willingness and ability to help strategize broad civic support. The greater the number of public official advocates, the more likely a public/private partnership will be successful. City manager, housing, community/economic development and/or arts/culture departments staff, who exhibit creative thinking and problem-solving skills, deep knowledge in their specific fields and experience with complex private/public real estate projects. Additionally, staff who are most helpful with advancing projects, vocally support the concept and openly strategize the most effective paths forward. They are transparent in their feedback and make themselves available to the process. Staff capacity is also measured by whether the project aligns with departmental plans and priorities that are underway or can be implemented within a 1 to 2-year time frame. Private sector leaders who are experts in their field or area of focus, and who are well respected and demographically reflective of the community. These characteristics make them most effective in their roles as ambassadors, funders, partners, connectors, and advisors who can share insight about local culture, and protocols. Core Group meetings, focus groups and private conversations revealed leaders who are supportive and who exhibit many of these important characteristics. The City of Asheville has prioritized affordable housing, new development and support of the creative sector through its planning documents, funding strategies, and initiatives. Staff knowledge of the state funding situation and strategic efforts to move Asheville forward suggest a city that is highly capable and ready to move forward. Observations that underscore the strength of the Local Leadership and their capacity to help advance a project include: Seventy (70) diverse private and public-sector community leaders voluntarily convened for a reception to learn more about the study and share their thoughts about opportunities for a space-based initiative. Mayor Esther Manheimer and Community and Economic Development Director Sam Powers are members of the Core Group, providing strong civic representation. Councilwoman Julie Mayfield spoke supportively at the opening reception and Vice Mayor Gwen Wisler attended the public meeting. Cultural leaders shared a common theme of rising costs creating a united front among a diverse group of organizations and artists. Collaboration was described as a core value in the cultural community, along with supportive and hard-working. The CCCD in partnership with the Asheville Area Chamber of Commerce successfully lead a complicated effort that coalesced the public and private sector around the issue of affordable creative space. Participants who convened for focus groups and meetings were highly prepared and articulate on the topics discussed, indicating a significant level of sophistication. University of North Carolina Asheville (UNCA) is represented on the Core Group and offered sites for consideration. UNCA is interested in a community benefit project and appears to consider how their expanding presence can support the City s planning efforts and the needs of the creative community. 11

12 Sustainable Community Impact Community impact can be measured in variety of ways. When community refers to the creative sector specifically, Artspace considers how the project concept, the physical space and management practices support artists artistically, socially and economically. When the community refers to the immediate neighborhood, development growth and affordability trends are reviewed to understand if the facility is contributing to area revitalization and/or preserving affordability in an escalating market. The community may also refer to an entire city or region. In that case, the impact may be measured by how well the artist facility advances city or regional goals. While some impact is a natural outgrowth of an artist community 3 seeds can be planted to ensure that a project is positioned for a specific preferred impact and that the impact is self-sustaining. In Asheville, there are four important target areas that if addressed through a new artist community development, will help ensure a positive impact not only for the artists who live and or work in the spaces, but for the community at large. These include: Social equity: This is a City of Asheville Comprehensive Plan priority and a recurring theme of the visit. It will be important that the Core Group and project leaders embody diversity. Tenants and residents of new space, likewise must reflect an inclusive approach to development and leasing. Finally, a new project has the opportunity to model programs and activities that promote cultural and social equity. Partnerships with organizations serving disenfranchised communities, thoughtful and strategic outreach methods, and commercial leasing practices that prioritize tenants in support of these objectives, is critical. Permanent affordability: New space can be modeled for permanent affordability. Examples include: funding and property covenants that require long-term affordability in return for subsidy; and, nonprofit or artist-owned buildings that include market rate spaces that spin off revenue to keep rent for artists below-market. Retention of an authentic arts community: While retaining artists in Asheville and Buncombe county is a priority, retaining authentic artist districts is important not only to the artists who pioneered underdeveloped areas, but to the health of the creative economy. Focusing new permanently affordable, inclusive spaces in the RAD will have a positive long-term impact. Complementary not competitive development: A new facility or new space initiatives must consider other existing or planned creative space developments. In particular, market study data can be shared with developers, property owners and cultural organizations so that they might help address the need for new space. Future data may also be used to help those who have underutilized space or a developing business model (maker space or co-working space for example) connect with users. Open communication and collaboration between the creative and development sectors will help reduce the possibility of over saturation of space or new tensions within the community How Artist Space Matters and How Art Space Matters II, By Metris Consulting for Artspace; measure the impact of five Artspace developed affordable artist communities on the artists and surrounding neighborhoods

13 Recommendations ARTS MARKET STUDY Conduct an Arts Market Study (see Appendix III) to test the proposed mixed-use, 80 unit live/work project concept and to provide quantifiable data that may encourage multiple affordable artist space developments Refine the project concept, per Arts Market Study results Grow the Core Group to reflect greater diversity Transition to a predevelopment phase that would include: Site selection, control and due diligence Responsive pro-forma development that considers the market, site and funding complexities (multiple scenarios would be tested) Development team and partner formation Architectural design Funding assembly Help interested local partners and developers advance multiple creative space initiatives that address the local need and affordability parameters Other initiatives that would help to support the creative sector include: Develop a Cultural Plan Arts overlays that place special requirements on new developments or offer special development incentives in identified cultural districts. For example, require affordable creative spaces in new market rate developments; offer special use permits for non-conforming creative spaces that meet a safety threshold or streamlining approval process; or waive fees for projects that include affordable creative space. An Arts Market Study is a required step in the predevelopment of an Artspace project. It is an in-depth analysis of the space needs of artists and creatives in a community. Each study includes a survey of individual artists and often an additional survey of arts organizations and creative businesses. Each survey is customized to reflect the unique characteristics of the proposed project concept. Creating the survey, publicizing it, hosting it online, analyzing the data, and preparing the report takes about six months. The Arts Market Study gathers a wealth of data about the area s creative community, including the arts disciplines, preferred amenities, neighborhoods of interest, income range, current space arrangement, amount they are willing to pay for space, and general demographic information. The goal is to determine the size and nature of the market for an affordable mixed-use arts project. It tells us how many live/work units and how much commercial space the local arts community can fill and what amenities are desired. The study is also a critical tool in demonstrating the need to the public and private entities as they decide whether to invest financially in a project. 13

14 COMMUNITY PROFILE Creative Sector Asheville, North Carolina, the county seat to Buncombe County is a lively community defined most dominantly by its broad creative sector. Its standing as an arts and cultural destination is solidified by regional and local assets. Non-profit industry leaders include The Center for Craft, Creativity & Design which grew out of HandMade in America. For twenty years, up until its closure in 2015, HandMade in America drove economic development and regional transformation through craft. Educational institution standouts include University of North Carolina Asheville, a dedicated liberal arts campus, and Penland School of Crafts, 50 miles to the northeast. Cultural tourism destinations include the River Arts District, Pack Place Cultural District, and the Downtown Asheville Arts District. Asheville s tradition in crafts and the performing arts dates back centuries. Major cultural influences included the Eastern Band of the Cherokee Nation with their extraordinary skills in pottery, basket weaving, carving and tool-making, and Scottish and Irish settlers with their talents for music and dance. The industrialist, George Vanderbilt chose to build his Biltmore chateau in the late 1800 s with renowned architects of the time and the finest artisans in the world. Black Mountain College, an experimental educational community that specialized in the avant-garde, included some of the most influential visual artists, composers, poets and designers of the mid-20th century. New 21st century creative industries have built upon this history. Today, for example, the River Arts District (RAD) is home to artists of all disciplines including clay, fiber, watercolor, wood, and glass. Galleries range from small studios to modern art spaces to the Odyssey Center for Ceramics, home to dozens of artists. Citywide, the eclectic Echo Mountain Recording Studio, Asheville Community Theater, NC Stage Company, The Magnetic Theatre, Toy Boat Community Art Space, Orange Peel, The Grey Eagle, Diana Wortham Theatre, Thomas Wolfe Auditorium, Asheville Symphony, Asheville Lyric Opera, and the Ballet Conservatory of Asheville showcase a wide variety of the City s ASHEVILLE, NC AT A GLANCE 14 Source: Esri Community Analyst Population (2017 estimate): 92,066 Population, % change : 10.4% Est. Population growth : 7.1% Median Household Income (2017 est.): $43,368 Median gross rent, 2015: $866 Renter occupied households, 2017: 21,398 (52.1%) Race and Hispanic Origin, 2017 (top 3): White 78.3%; Black 13.1%; Hispanic/Latino Origin 7.6% (Source: Esri Community Analyst, US Census)

15 performing art talents. The City s indie music venues and breweries, lively neighborhood festivals, and rich street busking culture provide additional opportunities unique to Asheville. The latest craft boom is in the artisan craft brewing industry. According to the Asheville Chamber of Commerce, Asheville is estimated to have more breweries Arts and Creative Business Snapshot per capita than any U.S. city. The collection of highly skilled Source: Asheville Chamber of commerce brewers led New Belgium to build a $140 million craft brewery on a brown-field adjacent to the RAD, furthering the momentum surrounding the district. The project is estimated to add 260 jobs and is seen as a model of environmental stewardship. The public sector has been an active supporter of arts and culture in Asheville. Noting its importance, Asheville 5X5 Vision 2020, the Economic Development Coalition s five-year strategic plan, established arts and culture as a supporting element of the area s economic development strategy. Numerous studies have been commissioned touting the importance of the arts and establishing ways to support the arts downtown and through the RAD. The city also has a Public Art and Cultural Commission dedicated to promoting art displays in public spaces and advancing the goals of Asheville as an arts destination. Public art places and spaces is the focus of Asheville s Urban Trail, a walking tour of thirty plus public artworks historically and culturally significant to the city. The creativity of western North Carolina has led to a community branded by the arts. This is a great reputation for a city under 100,000 people to have and should be nurtured. The Asheville Area Arts Council, formed the Buncombe Cultural Alliance to do just that. An alliance of area experts, it worked to build awareness of Asheville s creative community and its economic worth, secure funding, and create policies that strengthen the creative sector, expand market, facilitate permitting, and ease regulation. The group was convened in response to the recommendations set forth in the 2009 Downtown Asheville Master Plan 4. A review of the plans and studies relating to the arts and to housing affordability in Asheville can be found in Appendix IV. The nonprofit arts and culture sector is a $68 million industry in Buncombe County. It supports 2,233 full-time jobs. The hard work by many to solidify the creative sector has been worthwhile. In 2015, the nonprofit arts and culture sector was a $68 million Buncombe County industry. It supported 2,233 full-time jobs and generated more than $7.3 million in state and local government revenue. The direct spending by non-profit arts and culture organizations estimated at $26.4 million annually, leveraged $42.5 million in additional spending by audiences. Indirectly that additional spending strengthens the local economy through support of local hotels, restaurants, retail, and so on. Investment in the arts yields a great economic return, and this data dispels any misconception that investment in the arts is at the expense of local economic development. 5 4 Asheville Area Arts Council, Buncombe Cultural Alliance, buncombe-cultural-alliance/# 5 Americans for the Arts. Arts & Economic Prosperity 5 (AEP5) Buncombe County Results. Asheville Area Arts Council

16 Tourism Sector Asheville s popularity as a tourism destination is tied to its creative sector. According to the Asheville Convention and Visitors Bureau, in 2016, Asheville attracted 10.9 million visitors generating $2.9 billion in economic impact. 6 Lonely Planet ranked Asheville the #1 Best in the U.S. Travel Destination for 2017, citing that Asheville welcomes everyone with open arms and has been quietly emerging as a haven for creative spirits for decades. 7 This tourism boom translates into real dollars for the local economy. Cultural tourists spend more than local attendees, ($85.13 vs. $27.81) per event, excluding cost of admission. 64.4% of non-resident attendees report that the primary reason for their trip to the Asheville was to attend arts/cultural events, and nearly fifty percent of those surveyed said they would have traveled elsewhere if not for that cultural experience in Asheville. Forty one percent (41%) of local residents surveyed expressed a similar sentiment. 8 Event-Related Spending by Arts and Culture Event Attendees In Buncombe County (excluding the cost of event admission) Residents Non-residents All Buncombe County Event Attendees Total Attendees $41, , ,567 Percent of Attendees 58% 42% 100% Avg. Dollars Spent Per Attendee $28 $85 $52 Total Event-Related Expenditures $11,787,557 $30,733,141 $42,520,698 Source: Americans for the Arts, Buncombe County, 2017 Report 6 The Economic Impact of Tourism in Buncombe County, NC: 2016 Analysis. Asheville Convention & Visitors Bureau. Tourism Economics, May The Best Places to Visit in the US in Lonely Planet, Dec. 2016, Accessed 28 June Arts and Economic Prosperity, AEP5, Source: Alli Marshall, Explore Asheville

17 Affordability Crisis It is a monumental task for U.S. cities like Asheville to remain authentic arts/cultural and tourism centers, while at the same time ensuring permanently affordable spaces for artists, makers and cultural workers; collectively its creative workforce. It faces the all too familiar trend of creative neighborhoods becoming hip and desirable, leading to new development and increased real estate prices that force creatives and their families out of areas they made popular. In order for Asheville to maintain its standing as a recognized arts tourism destination and creative economy center, it will need to focus on creative workforce retention. If artists cannot afford to live and work in a community and creative businesses cannot find affordable commercial space in which to operate, then the related economic benefits will equally suffer. This affordable space challenge and the need to protect the most vulnerable from the ill-effects of gentrification are substantiated in the Alternatives to Gentrification in the East of the Riverway, study commissioned by the City of Asheville in In this study, Affordable Housing and Artist Spaces were among the four identified strategies for ensuring that the Asheville neighborhoods remain healthy and vibrant, inclusive and heterogeneous. 9 Using economic analysis and an assessment of neighborhood needs through public meetings, the report identified issues facing minorities, artists, and overall lack of affordability. Recommendations include investigating inclusionary zoning, which is not currently enabled in North Carolina; using the Housing Trust Fund (HTF) to help fund affordable developments including live-work cooperatives for artists. Other reasons for Asheville s affordability crisis outlined in the report include: too little vacant land; tourism-related, lowincome jobs; a large number of second homes (25%); and, mountain terrain that increases construction costs. Asheville and the greater region have recovered well from the Great Recession as evidenced by the area s population growth. Growth has averaged 1.2% annually from 2012 to 2016 or about 4,500 people annually, all as a result of net in-migration. Home sale prices have outpaced wage inflation, adding pressure on the ownership market. In 2016, the home ownership vacancy rate was 1.9%, relatively balanced compared to 3.2% in Vrtunski, Sasha, AICP. Alternatives to Gentrification for East of the Riverway Area. Ashevillenc.gov. City of Asheville, Apr Web. 10 HUD: Office of Policy Development and Research. COMPREHENSIVE HOUSING MARKET ANALYSIS. The SOHO Effect Defined Artspace refers to this trend, which is relevant in particular to the RAD and Downtown Asheville, as the SoHo Affect. In Artspace s experience, the irony of the SoHo Affect, is that most artists are not benefiting from the capital market upturn. They do not have the funds or the collateral to purchase properties and without an equity stake, find themselves in unstable rental situations. The lack of affordable space for artists forces relocation and creates an underground market for illegal, unsafe space owned by private landlords who are either absent or turn a blind eye. It is imperative to protect creatives now and prevent these vibrant and authentic art communities from vanishing. 17

18 The median home price increased 88% from 2000 to 2015, rising to $235,000, further demonstrating the affordability crisis facing the city. 11 HUD estimated that the rental market vacancy rate in 2016 was 7.0%, significantly lower than the rate in 2010 at 10.6%. Interestingly, the vacancy rates for units built after 2010 (13.0%) was more than three times the vacancy rate for those built before 2010 (4.0%). This demonstrates among other factors, that the influx of new apartment units being built at higher rent prices are not leasing up nearly as fast. Effective average rent in the City of Asheville was $1,050/month in 2016, considered affordable to those earning more than $31,500 annually. According to the U.S. Census American Community Survey, 40% of households earn less than $35,000 annually, showing the high housing cost in comparison to relatively low incomes. Another dilemma adding to the tight housing market is the boom in short-term rentals through websites such as Airbnb.com and VRBO.com. Although city government continues to work to balance concerns about short-term rentals in residential districts via policy and regulation, focus group participants noted single-family homes that have been converted into vacation rentals as a major problem. This ties in with the tourism boom mentioned earlier. The popularity has taken a significant toll on the affordability of the city. As the real estate market and tourism continues to boom, real displacement issues continue to be brought to the forefront. Asheville is currently undertaking Living Asheville, A Comprehensive Plan for Our Future an update to the 2025 plan to guide its long-term development to The themes of the plan resonate with the work of Artspace. In particular the overarching theme in the recently released draft report of Interwoven Equity and the commitment to neighborhoods that are socioeconomically diverse with a range of affordable housing choices. Another relevant tie-in is the theme A Resilient Economy, a call to increase and diversify the housing supply especially for low to moderate-income households. This could be achieved by a thorough review of existing policies intended to provide flexibility and allow for live work spaces. This theme also notes the importance of the creative/maker economy and details ways to promote this industry by means such as linking artists with small business resources and lending opportunities Pan, Yuqing. The U.S. Cities That Are Gentrifying the Fastest You ll Never Guess No 1. Realtor. com, 23 Jan. 2017, 12 Skidmore Owings & Merrill. Living Asheville: A Comprehensive Plan for Our Future, 2036 Vision Ashevillenc.gov

19 QUALITATIVE FINDINGS Following is an overview of each of the areas of focus in this study. Each section includes an introduction to the topic, salient points, key findings and/or recommendations. Project Concept Some communities enter into a Preliminary Feasibility Study with general stakeholder consensus about the type of space or space-based initiative they need and want to create. They may have identified complementary objectives they would like to address with new space (e.g.: area revitalization or economic development) and certainly can articulate the primary motivation for the investment. Artspace is then tasked with evaluating the proposed Project Concept by either confirming or challenging it. Artspace considers many factors and makes recommendations about the Project Concept to move forward and to help frame the discussion. If the Project Concept has not been determined, Artspace looks at the needs and goals of the creative community, the will and resources of the private and public sector, and any well-aligned opportunities that may drive the Project Concept in a particular direction. In Asheville, the concept of creating affordable space for the arts is primarily driven by a desire to preserve affordability and expand access to affordable housing. This focus on affordability is complemented by a local understanding of the arts as a powerful economic and tourism driver, and as a way to celebrate and preserve Asheville s unique culture. Based on findings from the series of focus groups and discussions, the concept of an Artspace-style project with affordable live/work space on the upper floors and affordable community/commercial/studio The concept of an Artspace-style project with affordable live/work space on the upper floors and affordable community/commercial/ studio space on the ground floor stood out as the priority Project Concept. space on the ground floor stood out as the priority Project Concept. This vision aligns with the broader community priority of creating more affordable housing options downtown and is reiterated in the Living Asheville, A Comprehensive Plan for Our Future draft 2036 plan (2017), Downtown Master Plan (2009), and Asheville s Affordable Housing Plan (2008). With the City s broad focus on a diversity of affordable housing, an affordable live/work project for artists would represent as one participant put it, one piece of the affordable housing pie. 19

20 Complementary Objectives Identifying complementary objectives is key to the success of any public/private project, and this Project Concept would align with other City, County and community priorities. In addition to affordable housing and preservation of the creative sector, stakeholders mentioned the drive for clean energy and a need for business incubation (the food craft industry as an example). Other participants voiced an interest in artistin-residency space; the importance of incorporating elements of a shared economy; and, most importantly ensuring that social equity is at the forefront. These same themes resonate in the Asheville planning documents reviewed by Artspace staff. We heard strongly, that the more welcoming a project is to a diverse cross-section of the population, the more it will be deemed a success. Artspace prides itself in supporting historically disenfranchised and frequently underrepresented communities. Strategies Asheville should pursue to accomplish goals of project diversity and inclusivity include: Ensure the project leadership group reflects a diverse community; Involve a diverse community of artists and organizations in the development process; Provide space for culturally distinct, mission driven commercial tenants who may continue to serve the community from a permanently affordable home. All complementary objectives shared here and others yet to be discovered, should be vetted and prioritized and addressed through the process of concept refinement and project predevelopment. Artspace has experience forming partnerships with local community serving non-profits in its developments. Best Practices - Artspace and Non-Profit Tenant Partnerships Seattle, WA At the Baker Station Artist Lofts in Seattle, Washington, a bilingual daycare serves the multicultural needs of the neighborhood. Buffalo, NY - The Manchester Bidwell Corporation established the Buffalo Center for Arts and Technology on the ground floor of the Artspace Buffalo Lofts. It provides after-school visual arts programs for at-risk urban high school students as well as health sciences career training for under-employed and unemployed adults. St. Paul, MN - The Northern Warehouse Artists Cooperative houses a nonprofit serving homeless youth. Dearborn, MI The City Hall Artspace Lofts has an important partner in the Arab American National Museum, whose Executive Director joined the Board of Directors at Artspace, further solidifying the relationship. 20

21 Arts Market The Arts Market focus area centers primarily on feedback from the creative sector. For Asheville, this included approximately 50 diverse cultural leaders, individual artists/creatives/makers, creative business owners and educators. Our objective is to take the pulse on the needs of the creative community. Secondary to that is to understand the broader context which may include relevant trends, existing or planned cultural assets, and adopted public cultural plans. The information gathered is anecdotal and qualitative. In focus groups and a public community conversation meeting, explored the types of creative spaces that currently exist; what is needed; where there are naturally occurring areas of arts activity; and, what arts community participants feel are the biggest obstacles to and opportunities for long-term creative space solutions. These conversations help guide next steps including the design of a survey instrument(s) as part of a formal Arts Market Study (AMS). These survey(s) collect quantitative data to support new space initiatives and can inform new creative sector focused space-based public policies. The popularity of Asheville as an arts destination, has driven the River Arts District (RAD) in particular, to grow and change over time. The RAD has grown from an area were artists live and work in relative isolation among industrial warehouses, to a destination for tourists who want to see artists working in a vibrant, attractive area populated by new restaurants and bars. The recently opened New Belgium Brewery adds to this momentum. Changes to the physical spaces and the character of the place will continue to evolve from today, in the wake of planned infrastructure and investment including the implementation of pieces of the Wilma Dykeman Master Plan and the Riverside Drive Development Plan. A strategy for securing long-term affordable RAD restaurant/creative business space for the creative sector in the RAD and other expanding areas of Asheville has not been adopted leading to a strain on the creative community that will increase without intervention. Overwhelmingly, concern over a general lack of available space in Asheville was voiced. Exacerbating the situation are high and ever-increasing rent for spaces, some of which are not fully appropriate to the needs of artist tenants. We learned about artists who were displaced when an illegally occupied and structurally unsafe building was shuttered and torn down. Others are facing future displacement from the recent sale of the Cotton Mill Studios. Some voiced concern over artists being used as a catalyst for greater tourism and urban activity, while not seeing an equitable increase in their own productivity or income to match that growth. One alluded to crime and safety issues in the RAD expressing a concern that the current narrative for the area glosses over these issues, complicating the situation for artists who need affordable and safe space. Still others noted that some artists have been forced to move outside of the city in search of affordable space. For artists, this can be detrimental as they miss the opportunities and of living and working amongst other artists in the city. Notably, one participant described Asheville as a community where most residents identify as an artist or creative. In other words, everyone has a stake in the future of the artists and creatives in Asheville. 21

22 Cost Constraints The individual artists and creatives and the cultural leaders met with were highly sophisticated in terms of their knowledge of their own spaces and space related issues. Many were relatively new transplants, bringing with them the experience of other locales. This works in their favor as they were able to address market realities with a distinct purview. Not surprisingly, many also consider their craft as their primary business. Nearly one-third of the 23 met with in an artist focus group make 90%-100% of their income from their art, a substantial number compared to other focus groups we ve conducted nationally. For the most part, the focus group participants were business and/or home renters rather than owners. The terms of their rental agreements varied considerably depending on the neighborhood location and the benevolence of their landlord. Spaces ranged from $6.00/SF to over $36.00/SF/ annually with most falling under $18/SF. One artist and creative business owner suggested $12.00/SF as a target for affordability. This is consistent with Artspace s information, rents from $9 to $15 (not including utilities) are generally considered affordable within the creative and nonprofit sector, regardless of the region. Those with larger space needs (rehearsal, performance, industrial, for example), tend to be on the lower end of the spectrum. A questionnaire on rental ranges was distributed to participating artists with the following responses: 14 who lease studio/work space have monthly rents that range from $200 - $2800; 27 who reported their home rental or mortgage costs, pay between $325 and $2700 monthly; Average rent paid by these responding artists for current studio/work space is $759; Asked what the maximum they could pay for studio space in the future, the average maximum was $453/month; Current average housing cost is $795 by the responding artists; The maximum these artists can pay in the future is $752 for live/work and $506 for housingonly. Full questions and responses can be found in Appendix V. While this is not a scientific sampling, it does give insight to the concerns about rental costs that were voiced in our focus groups and public meeting. The findings are also similar to the 2014 Alternatives to Gentrification in the East of the Riverway survey of artists in the River Arts District. The primary difference is that three years later the artists feel the rent pressures more acutely, whereas then, it was the anticipation of rent increases that was most concerning. This reality is likely reflected in the need by some, for space that is cheaper than they are now renting. Understanding what is truly affordable to the arts community is vital to creating or marketing new artist spaces successfully. Artspace suggests expanding to a survey that reaches beyond those in RAD to those living and working in all of Buncombe County, as well as digging deeper into space needs and preferences for those spaces, including affordability. Space Needs The types of spaces needed, like cost, vary among artists with whom met. Appropriateness of space was a recurring theme. One interesting comment was a reflection on the change in the River Arts District. It is an area historically conducive to creative work, but with the ever-increasing tourism the ability of artists to create has been hampered by the need to interact with the public and tourists in particular. While this exposure and opportunity for sales has driven up costs and rents, some artists expressed that it has become difficult to create new work in an interactive commercial environment and that their income is not increasing enough to address the imbalance. This translates into a need by some for workspace that is private and separate from retail or open-studio concepts. 22

23 Based on our conversations and the questionnaire feedback, it is likely that the outcome of a formal, broadly distributed market survey would prove a strong need for affordable studio/work space as well as live/work artist housing. The ratio of the space types, the amount of space that can be supported by the market and associated features and amenities would be borne out of a quantitative survey. Some feedback heard during our visit can inform the types of questions to ask in a future study and in turn the answers can inform preliminary concept planning for new spaces and policies. We heard an interest in the following types of space: Gallery/exhibition Dedicated studio/making space for those who do not want to integrate their housing with their workspace Legitimate live/work Storage Recording space Communal space for artists who work from home studios, but crave the interaction of other artists Makerspaces/specialized studios (e.g. wood shop, dark room) Meeting space Event space Rooftop garden Incubator for small creative businesses and co-location opportunities; including opportunities for artists and creative businesses to connect and work together and programs to assist with growth transitions Co-working for cross-pollination for those in the craft food industries including shared equipment and resources to aid in scaling up production Hourly/short-term rental for theatre and music rehearsal Pop-up gallery Storefront with upstairs living space Micro housing with shared support Loading and room for shipping works and products made in a home-based or studio environment Artist-in-residency space for a diversity of visiting artists (musicians, writers, researchers, visual artists, makers) Space needs are not limited to individual artists and creatives. Nonprofit arts and cultural organizations provided us with feedback about their space needs as well. Of the thirty-two organizations and businesses who filled out a questionnaire, the primary need expressed was for creative office/administrative space followed by working space. We anticipate that a broadly circulated survey of organizations and businesses would reveal a creative community that would benefit from a variety of affordable long-term and shortterm spaces geared to administrative, work, performing, rehearsing and storefront uses, among others. Major Highlights - Arts Market Tourism - with the ever-increasing tourism the ability of some artists to create has been hampered by the need to interact with the public and tourists in particular Affordability overall the expense of renting space in Asheville is wearing on its artists Artist Appropriate not all spaces work for creatives, unique features and amenities must be considered Space Needs primary needs voiced by organizations/businesses are for creative office/administrative space followed by working space 23

24 Location Locations of interest for new space included not surprisingly the River Arts District. There was also an interest in: Downtown, West and North Asheville, and the South Slope. A follow-up market study can help to quantify areas of interest which can benefit the site selection process for a future mixed-use affordable arts facility. It can also give local property owners, developers and the city ideas about where the creative community would be most receptive to new spaces. A sampling of comments and observations from the focus groups and public meeting that inform our recommendations and future space initiatives are highlighted below: Affordable artist housing is important to arts and cultural organizations in order to attract administrative workers and leaders to Asheville. Artists and cultural organizations, should be invited to the table for conversations and planning efforts around the retention of the creative community. There is interest in a policy/program that would allow performing arts uses (in particular) in underutilized, city-owned historic structures in return for low-rent and renter financed improvements. Provide technical assistance to do-it-yourself, community-driven creatives spaces, to help advance several affordable space models, not just a single mixed-use project. Many of the small creative businesses in addition to capital resources, need affordable space while they grow their business typically capped for 3-5 or 5-10 years. There is a need for spaces at all price-points. Some need affordable space, others have the resources for closer to or market rate rents, but still want to live and work among other creatives. Consider mixed-income for sustainability. Summary In summary, meetings with artists and leaders of arts and cultural organizations substantiated the driving motivation behind this study, that there is a need for affordable housing and working spaces for artists. It also opened the conversation to other types of spaces, programs and infrastructure (policy, technical assistance, incubation) that would help to secure the creative community in Asheville and Buncombe County. Based on these conversations and our observations recommend: 1. An in-depth Arts Market Study to quantify the need, and provide information for project concept planning. Data can be used by all stakeholders including the City of Asheville and Buncombe County; developers; property owners; arts organizations; and others who want to create shared-spaces. We believe the study would reveal a substantial need for space and provide the data necessary for planning a successful mixed-use, mixed-income arts facility. Additionally, consider a series of follow-up focus groups and conversations aimed at identifying existing and planned space-based projects so that new spaces may be well coordinated and synergistic. Focus should also be on identifying partnerships for new space efforts. More information on the Arts Market Study can be found in Appendix III. 2. Given the significant breadth of artist, organization and creative business activity in Asheville, the planned growth and infrastructure and the variety of potential neighborhoods where affordable artist spaces could help to attract or retain the creative community, recommend that the City of Asheville undertake a cultural planning process. A cultural plan would help to link existing master plans and the Affordable Housing Plan and provide an actionable road map for infrastructure supporting the arts and creative sector in the years to come. Such a cultural plan will also lead to policy recommendations for the creative sector. 24

25 3. In anticipation of a market survey, possible predevelopment and/or a cultural planning process, strategies for meaningful inclusive outreach should be developed. In the wake of federal immigration policies, understand that it has become more difficult to make Latino/Latina immigrants, for example, feel welcome and safe in public meetings or focus groups. The use of reverse translation in meetings was one suggestion offered for whom English is not their first language. Open conversations with LEAF, Green Opportunities, Center for Participatory Change, and other culturally specific and minority serving organizations, to discuss how a new project initiative might intersect with their work. Overcoming barriers to participation through outreach, and diverse core group representation will be key to the success of any next steps. Funding and Financing An Artspace live/work project represents a significant investment of civic resources. A typical project of 50 to 70 live/work units plus community and commercial space costs $15 to $20 million. Predevelopment expenses the soft costs, such as architects fees, that must be met before construction can begin are seldom less than $750,000 regardless of the size of the project. Although a variety of federal programs, such as the 4% and 9% Low Income Housing Tax Credits (LIHTC), allocated through state agencies can be used to generate revenue for 50% or more of the cost of construction, a local commitment of low cost property and Affordable Housing Trust Funds and City Bonds (typically a combination of locally allocated federal sources such as Community Development Block Grants (CDBG) and HOME funds, or the equivalent), County and other public housing and redevelopment resources is necessary. We also look to the community to help fund the predevelopment expenses, often in the form of grants, economic development and affordable housing discretionary funds, impact capital low-interest and forgivable loans, TIF generated funding and other unique local and regional sources. One of the biggest challenges to affordable housing projects in North Carolina, from our experience in Gastonia, remains the severe thresholds for LIHTC. From 2011 to 2016, the state of North Carolina drastically reduced its per unit tax credit allocation from an average of $10,461 per dwelling unit in 2011 to an average allocation of $7,261 in You multiple these numbers by 10 to get the per unit allocation over the life of the tax credits. This escalating credit reduction and the North Carolina Finance Agency s use of per unit credit allocation as a primary decision point funding award (in other words, who can come in with the least expensive project), is a significant obstacle to obtaining a successful allocation of 9% LIHTC. Adding to this complication, Asheville has had a difficult time competing with nearby municipalities. The last 9% LIHTC development funded in Asheville was in At the time of this writing, local affordable housing developers are not attempting this competitive 9% LIHTC path. In recognition, the City of Asheville passed a $25 million bond measure to assist with affordable housing production. Most local affordable housing developers in Asheville, complete their projects with a combination of 4% LIHTC and tax-exempt bonds, cobbling together other gap sources. The gaps on 4% bond deals are much higher than with 9% LIHTC, requiring additional resources to complement tax credit equity. 25

26 UNDERSTANDING LOW-INCOME HOUSING TAX CREDITS (LIHTC) Source: NPR, Illustrations by Chelsea Beck/NPR. Explainer by Meg Anderson, Alicia Cypress, Alyson Hurt, Laura Sullivan and Ariel Zambelich/NPR and Emma Schwartz/Frontline 26

27 Much of our time with the City, the Chamber and other Asheville leaders in the financial industry was spent exploring these potential gap sources. These include: City of Asheville s Housing Trust Fund and Bond program. In 2016, the City added $25 million in new resources and is in the process of providing recommendations to City Council for how best to maximize the impact of these new funds. While a focus is likely to be on the redevelopment of city-owned land in priority areas, there may be other opportunities directed at private land, if it advances affordable housing goals in Asheville. $10, is targeted to directly support affordable housing projects through the Housing Trust Fund (HTF), with $15,000,000 targeted toward re-purposing land for housing (land banked. The maximum NOFA award per project currently is $1 million with a per unit award of typically $20,000. Federal Home Loan Bank of Atlanta. Its Affordable Housing Program (AHP) and AHEAD programs can offer capital and planning grant funds respectively. Grants are made through member banks working in partnership with local projects. AHP grants are currently capped at $500,000 per project. Asheville local bank members include: HomeTrust Bank and Asheville Savings Bank. Developing a relationship with a member bank and exploring funding options for predevelopment and development is recommended. Community Development Financial Institutions (CDFI s) provide low cost loans and grants for affordable housing and economic and community development initiatives. The nation s largest CDFI Self-Help Credit Union was founded in Durham, NC and has a strong presence in Asheville. They also allocate New Market Tax Credit for substantial, non-residential community benefiting, real estate projects. Tourism Product Development Fund (TPDF). The Tourism Development Authority s TPDF grant program is administered by the Convention and Visitors Bureau (CVB). Tourism dollars are a significant resource for Asheville. While the bulk of Occupancy Tax funding is targeted toward marketing efforts, the grant program receives 25% of the revenues for a total pool of $16 million in While affordable space for the creative sector has not been a focus of this fund, the fund has offered support to creative spaces and organizations (theaters, music venues, educational art centers, etc). The case could certainly be made that a potential project meets the grant objective of supporting the Asheville Destination Brand Promise, which emphasizes the importance of the creative environment and the core value of vibrancy. Maintaining affordability and space for artists and creative businesses are critical factors in keeping and retaining Asheville s unique sense of place and dynamic creative workforce which, in turn, provides a strong backbone for its thriving tourism sector. Federal HOME funds are allocated through a four-county consortium. Like elsewhere in the country HOME funds are a tenuous source at best, with limited funds being shared among the counties for tenant-based subsidies and gap funding. Funds can be targeted for mixed-income units of affordable housing up to 100% AMI. Community Development Block Grants (CDBG) are also a locally allocated federal funding source that is currently directed primarily toward services and economic development programs, rather than infrastructure. It is unusual to see funds used in a 4% deal, however a recent project received such an award. CDBG funding is currently at $1 million annually. Buncombe County participates in the development and funding of affordable housing units; a recent example is the proposed Lee Walker Heights mixed-income redevelopment project in the South Slope. A future affordable artist housing project in Asheville would be an opportunity for Buncombe County to participate in housing the area s low-income artists while supporting the region s creative economy. 27

28 Philanthropy from public and private sources are a significant funding source for acquisition and are necessary to ensure the affordability and sustainability of these types of projects. Land acquisition from the city, county or other partner agency for below market value in return for a project that offers a public purpose, is a key strategy for success. While there are too many variables at this stage to suggest what a feasible Asheville pro-forma might look like, the following chart demonstrates typical funding sources for an Artspace project using 4% Low Income Housing Tax Credits. For context, South Main Artspace Lofts in Memphis, Tennessee includes both historic rehabilitation and new construction, has 58 live/work units and 5,000 SF of commercial space. It was difficult to close the gap with so few units and no market rate rents to help support debt. The use of Historic Tax Credits is what made this project feasible. As discussed earlier, the limits North Carolina places on the 4% LIHTC will make an Asheville project even more challenging. A mixed-income approach and larger scale project are two strategies that we recommend toward achieving a feasible financing plan. Even so, significant gap funding like the sources we have just begun to identify, will be needed. A scenario that was run for a project in Gastonia, anticipated a need for nearly $6 million in philanthropy after other private and public sources were accounted for. South Main Artspace Lofts // Memphis, TN SOURCE AMOUNT PCT. Public Sources Federal low income housing tax credits (LIHTC) $6,414,179 33% State Historic Tax Credit $2,118,769 11% City of Memphis HOME Loan $700,000 4% TN Housing Dev. Authority Housing Trust Fund $500,000 2% Downtown Memphis Commission $200,000 1% Private Sources First Mortgage $3,100,000 16% Philanthropic / Artspace Sponsor Loan $3,060,000 16% Reinvested developer fee $2,800,000 14% Deferred developer fee $615,485 3% Philanthropic Support Philanthropy plays an important role in every Artspace live/work project. In a typical project, between 10% and 20% of the total construction/development funding comes in the form of gifts from foundations, corporations, and, in some cases, individuals. Predevelopment is often funded with significant philanthropic dollars as well, whether from local sources or regional and national foundations. Artspace has regional and national funding relationships, but it always takes a local lead to help open the doors to potential philanthropic partners. In addition, not all national funders are interested in all the markets where we work. 28

29 Refining the project concept with community participation and buy-in, working with exceptional project and program partners, and strategic messaging will all be critical to the project s success in obtaining philanthropic dollars. The advantage of private fundraising for a mixed-use, artist live/work project over more traditional affordable housing projects, is that it may appeal to funders with diverse missions. The right concept, partners, programs and non-residential tenant mix, may attract those who have various missions. Funders can include those that support the arts; affordable housing; small business and economic development; community revitalization; community, social justice and youth programs; green building design; technology; and culturally specific communities. Refining the project concept with community participation and buy-in, working with exceptional partners, and strategic messaging will all be critical in obtaining philanthropic dollars. A project in Asheville may attract a unique donor base of individuals and family foundations that support the arts, technology, and education. There is a not a large corporate foundation presence. The Community Foundation of Western North Carolina (CFWNC), is a nonprofit philanthropic organization serving 18 counties. CFWNC works with individuals, families and corporations to create and manage charitable funds and make grants to nonprofits and public agencies within their 18-county region. The organization has four focus areas: Food and Farming, Early Childhood Development, People in Need, and, Natural and Cultural Resources. In addition, the Economic Development Coalition for Asheville-Buncombe County and the Asheville Area Chamber of Commerce developed a high-growth entrepreneurship initiative called Venture Asheville. One core program of Venture Asheville is Asheville Angels, a member-based angel investor network. CFWNC and Venture Asheville may offer links to individual donors for an Artspace project in Asheville. Two highly competitive, but appropriate, national funding sources to consider for the proposed project and other related arts and placemaking initiatives in Asheville are the NEA s Our Town grants ( grants-organizations/our-town/introduction) and the privately funded, Artplace ( org). Both have annual applications and are best sought through public/private partnership. Artplace is a 10-year initiative that began in It does not currently fund capital projects, but is a great resource for a coordinated placemaking initiative in the area or during the development phase. The following funders were mentioned in our finance and funding focus group as potential sources of either predevelopment, planning or project support. These funders based in Western North Carolina include: Z. Smith Reynolds Foundation has funded community economic development ; Kate B. Reynolds Charitable Trust, whose focus is on underserved and low-income communities; The Golden Leaf Foundation who funds programs and initiatives that are economic catalysts ; SECU Foundation that funds high-impact projects in the areas of housing, education, healthcare and human services; and GE Aviation corporation giving program. HomeTrust Bank has a strong regional presence and are generous in giving back to Asheville area nonprofit organizations and programs Asheville Savings Bank 15, similar to HomeTrust Bank has a history of giving to area nonprofits and programs. 15 Asheville Savings Bank (ASB) announced a merger with First Bank in May 2017, following the Artspace visit and Funder Focus Group. An ASB press release describes a parent company acquisition, whereby First Bancorp will own ASB Bancorp. First Bank is described by ASB as a local, North Carolina based community bank, which supports our commitment to our customers and community. The impact of this merger on the funding of a future project is unknown. Press%20Release%20Merger%20Agreement.pdf 29

30 Other Financial Considerations Lenders A consortium of community lenders in North Carolina was formed in 1990 in an effort to provide more loans for affordable housing developers. Community Investment Corporation of the Carolinas (CICCAR), is a regional lending consortium offering permanent debt financing to support the development of affordable multifamily housing in six states, including North Carolina. The consortium meets quarterly and has been successful in competing with larger, national banks and keeping residential and commercial loans local. One of the consortium lenders, HomeTrust Bank, participated in the funder focus group. Dana Stonestreet, Chairman, President and CEO, provided valuable information about the consortium. We also noted that one of our strong lending partners, Bank of America, is a member of the consortium and has a role on one of their leadership committees. Some eligibility information shared includes: At least 51% of the project units must provide housing for low income persons at or below 60% of the area median income Rents including utilities, cannot exceed the applicable low income rent ceiling based on 30% of household income Qualified units must remain occupied by low income tenants while financing remains in place. In general, an Artspace project would require a bridge loan and a permanent loan that would amount to no more than 16% of the overall total development budget. Loans on the housing side are kept to a minimum. Artspace aims to include as much philanthropic subsidy on the commercial side as well to keep rents low for the nonprofit, arts and small business tenants. Community Partnerships The value of strategic and complementary partnerships for this project cannot be overstated. Partners often bring their own capital, land, or philanthropic networks. The outcome of the partnerships in the form of vital arts and community programs or exceptional tenants, can attract additional support and funding, adding to the project s long-term sustainability and community impact (more on this in following sections). Summary In conclusion, the information gathered during our three-day visit and subsequent research reveals a number of opportunities for predevelopment and capital funding of an affordable mixed-use, artist live/ work project in Asheville. While no funding process is ever easy, we are cautiously optimistic. There are many potential local and regional resources and tools that support affordable housing, as well as specific City of Asheville funding options for a project that is aligned with civic goals. Additionally, if the project can successfully engage and excite the local community, the history of private investment and regional donor capacity bodes well for helping to meet philanthropic project goals. We are encouraged, but recognize a lot of questions remain unanswered. Once the market demand is confirmed more can be done to drill down on appropriate funding scenarios as well as sites. 30

31 Site Assessment Methodology The goal during this preliminary evaluation phase is not to select a site, but to confirm that reasonable options exist; to better understand neighborhoods in the context of creative and community assets; and, to make recommendations for either eliminating options or keeping them in contention. Local stakeholders are tasked with putting together an initial list of properties for review that align with criteria provided by Artspace as well as local civic and stakeholder priorities. For Asheville, this included sites prioritized by the City Council, for the development of affordable housing. The list is intentionally limited due to time and scope-of-work constraints. It is intended as a sampling and is not exhaustive. While some sites from this visit have been prioritized for further consideration, others with lower scores may gain favor in the future, and still others not considered during this study may yet emerge as an opportunity. Sites influence project concepts just as Arts Market Study findings and available funding, impact site selection. Once a site is prioritized and under site control in a predevelopment phase of work, there is due diligence that must still be performed. Site selection is a long and deliberate process. This study is just the beginning. For the purposes of achieving the goals of this study each site was preliminarily evaluated. The pros and cons of each were considered and each was scored in an attached Site Matrix (see Appendix II), according to the following criteria: Location (e.g: How close are other cultural assets? Is it a priority development or funding area? Is it highly visible and accessible? Is the creative sector interested in the location/ property?) Size (e.g.: Is it large enough to support the Project Concept?) Conditions (e.g.: Are there significant environmental concerns?) Zoning and Land Use (e.g.: Will a zoning change be required?) Acquisition/Site Control (e.g.: Are acquisition or long-term lease terms amenable to making space affordable? Can the site be tied-up without a lot of up-front cost, and for a year or two while funding is assembled?) Potential for sustained community impact (e.g.: Does the site offer unique opportunities for positive impact on a neighborhood or for community partnerships?) Alignment with community priorities (e.g. Is the site difficult develop or a potential catalyst for development? Will it save an historic building? Will it anchor an arts district?) Other considerations Site Review Process We visited five areas and ten sites as a part of the official tour. Several sites/areas impressed us as candidates for further consideration as a mixed-use, artist live/work housing project. Others, while noted as inappropriate or less of a priority for an Artspace model project at the time of this study, may lend themselves to other creative uses important to the overall affordable creative space strategy in Asheville. For some context, it is important to understand that a project in the model of a mixed-use Artspace live/ work facility relies on competitive, public funds that can take a year or more to assemble. Purchasing a site prior to funding is not possible, which means that generous and flexible site control options are necessary. Property owners need to be willing to hold sites in limbo for one or more years. Additionally, project feasbility relies on a low purchase price or long-term rental. The greater the cost of an acquisition/ long term lease, the more subsidy necessary, and the less financially feasible the site and project become. 31

32 Property owners looking to make a profit from the sale of their land are not optimal partners in these projects leading us to prefer site options that are publicly held or that are owned by a nonprofit. Many of Artspace s projects have been made possible through conveyance of city-owned property. In Asheville, the City s process for property conveyance has not yet been determined, but an RFP process is one possible path, for projects that meet their development priorities. The City does also have the option to directly negotiate terms for a development offering a minimum of 20% affordable units of housing which opens up the possibility of additional site opportunities. Private property acquisitions are a fine alternative to the preferred public partner/acquistion, if property owners are supportive of the overall concept and willing to be creative in the transaction (as a seller and/or investor or partner). In general, we look for buildings and properties that are appropriate for adaptive reuse and suitable for artist housing. This includes existing structures with high ceilings, floor plates that accommodate open floorplans and access to natural light. Historic buildings offer the advantage of related funding sources and alignment with community preservation goals, but can be a challenging and expensive renovation process. Artspace has a number of historic buildings in its portfolio, they do often lend themselves well to art facilities. In the 4% Low Income Housing Tax Credit, large-scale project scenario discussed as a Project Concept and financial model to test, an existing structure would likely need to exceed 100,000 SF. For new construction projects, we look for sites over.80 acres, depending on height/density restrictions and, transit and parking requirements. Some sites may accommodate both building reuse and new construction. It is important to reiterate that while having one or more preferred site opportunities is a critical component of a future project, it should not drive the project at this stage. The key is to gain a deeper understanding of the elements that make a site feasible for any given project concept, set of community goals, and economic resources. The Sites The sites we visited are listed and scored in the attached Site Matrix (see Appendix II) as part of an evaluation. The top ten sites seen in the map below are described by areas/neighborhoods and ranked according to Artspace s evaluation criteria. 32 Map of Top Sites, Source: Esri Business Analyst

33 RIVER ARTS DISTRICT (RAD) and FRENCH BROAD RIVER ADJACENT The RAD is a naturally occurring and rapidly gentrifying area of substantial arts activity with a publicized number of more than 220 artists working, showing, selling, teaching and living in the area. Artists began populating the area in the 1990 s and ultimately self-organized as the River District Artists (now the River Arts District Artists). In the early years of area growth, artists were able to secure a strong foothold through the purchase and lease of low-cost real estate. Between 2004 and 2010, artist-led advocacy resulted in the formalization of the River Arts District as a destination. The tourism that has taken hold, can be credited much to the branding and promotional efforts of the artists themselves as well as the coordinated effort and funding assistance from the Asheville Tourism Development Authority/Convention & Visitors Bureau, Economic Development Coalition, and the City of Asheville. Promotional map of the River Arts District Core The core of the RAD runs along a one mile stretch of the French Broad River, primarily along the east side of the river. A strong presence of creative and entrepreneurial activity has taken hold on the west side as well, where the New Belgium Brewing Company anchors new and growing private investment. The district ends to the north, just shy of the University of North Carolina Asheville (UNCA) and the privately developed 100,000 sq. ft. River Arts Maker Place (RAMP) in which UNCA leases space for its own maker facility and program known as STEAM Studio. The City is investing heavily in redevelopment efforts in the area including the planning and implementation of the French Broad Greenway System expansion, additional parks and open spaces,, bicycle lanes, a river access system, and several public art projects. It is one of four identified Innovation Districts in the city. Most of the completed infrastructure is on the west side but improvements will continue on the east side including the recent completion of the adaptive reuse of an historic 1,900 square foot city-owned structure at 14 Riverside Drive into an Arts and Culture Center, just south of the Haywood Road overpass and near the opportunity sites we visited. The vision for the building was created by district artists and stakeholders and anticipates community and arts uses geared to area visitors. The two sides of the river are connected by the West Asheville Riverlink Bridge. The RAD retains a visual sense of grit and a do-it yourself artist entrepreneurial spirit that arrived with Asheville s first wave of displaced artists and creatives who drawn by plentiful affordable and underutilized warehouse, left downtown and settled in the area. The second wave of displacement is now affecting those who did not purchase property years ago. There are new developments, trendy restaurants, cafes and breweries, generally rising rents and artists vocal about their concerns. This concern is punctuated by the pending loss of the relatively affordable Cotton Mill Studios which recently sold and is slated for market rate housing. It currently provides large working spaces for 8 artists. The area is transforming rapidly and will look very different in years to come. 33

34 Retaining artists through new permanently affordable live/work space within the RAD is extremely attractive and in many ways, makes this the number one area for consideration of a new live/work, mixed-use project. Having space for artists to live AND work in the district would provide greater stability in an area where real estate pressures to advance market rate housing abound. Living space for artists seems to be one of the missing links in all of Asheville, profoundly so in the Downtown and River Arts Districts. Following are descriptions and an evaluation summary of some of the potential sites we visited in the RAD Riverside Drive (Priority Site) Site Matrix Score: 29 Pros: Close to other cultural assets, offering synergy and a critical mass of creative activity Will help retain artists in the River Arts District they popularized, helping to weight the scoring of this site as compared to those in other neighborhoods Easy access to new French Broad Greenway Sizeable site supporting a large-scale development Removed somewhat from the core of the RAD, offering some respite for artists seeking to balance commerce with privacy Owned by and a priority development site for the City New bicycle lanes and sidewalks decrease need for owning vehicles, making overall cost of living more affordable City planned site preparation Cons: Environmental concerns including being in a Flood Hazard Zone All new construction site eliminating the Historic Tax Credit as a resource Height limited to six stories, including parking Proximity to active rail The City owns these two vacant parcels that are 44,800 and 31,800 sq. ft. respectively. A former derelict warehouse, the Ice Plant building was razed at this location due to extreme safety concerns. Providing new, safe space for artists on this site would be meaningful. A smokestack is all that remains as a nod to its history. The sites are east of the river and very close to non-passenger rail abutting the east side of the properties. In the heart of the RAD, the parcels are just north of Haywood Road and a short walk to the Cotton Mill Studios building to the north. There are other artist studio spaces and nonprofits to the south, including the Arts and Culture Center at 14 Riverside Drive, recently renovated by the city in a publicly owned historic building and now open for use. 34 These are infill sites subject to Form Based Code 16 and to be developed consistent with River Arts District zoning guidelines that allow housing with active ground floor uses. Traditional land use regulations can be frustrating for neighbors, and challenging and expensive for developers when intended uses are prohibited and conditional use approvals or zoning changes are sought. Alternatively, Form Based Code 16 Form-based code is a land development regulation that fosters predictable built results and a highquality public realm by using physical form (rather than separation of uses) as the organizing principle for the code. A form-based code is a regulation, not a mere guideline, adopted into city, town, or county law. A form-based code offers a powerful alternative to conventional zoning regulation. (source: Form-Based Codes Institute)

35 offers a community control over the look and feel of its built-environment, but the steadfastness of the regulations, can present a different type of challenge to developers. For example, creative space and artist live/ work housing may introduce designs that emphasize volume and increased floor to ceiling height, which can be in conflict with adopted codes. It can be an expensive and time-consuming endeavor to pursue exceptions in the event the prescribed form does not support the intended use Riverside Drive The site is in a flood hazard area with a six-story height restriction for affordable housing, including ground floor parking. Much like the Artspace developed and owned Tannery Artist Lofts in Santa Cruz, CA (a new construction project situated in a 100-year flood zone), an artist live/work project would require first floor parking with the up to five stories of residential built above. This strategy elevates the Tannery Artist Lofts// Santa Cruz, CA housing out of the flood zone. Asheville s highest poverty census tract is in this area, which may prove beneficial if competing for public funding sources that prioritize projects in a Qualified Census Tract (QCT). Bartlett Street Site Site Matrix Score: 28 Pros: Provides an opportunity to look at social equity by connecting the needs of the RAD with the needs of the adjacent historically African American community of Southside Will provide housing for artists just adjacent to the River Arts District they popularized Close to other cultural assets Within walking distance to a critical mass of studios and galleries on Depot Street Less industrial than the Riverside site, it offers a more family-friendly environment which if the market study reveals an abundance of artist household with children, could be welcome Provides an opportunity to bridge a mostly single-family home neighborhood with the commercial, mixed-use district Cons: The site topography is awkward for a large scale mixed-use project and may be better for a townhome style development. Three-story height restrictions limit density and may be an obstacle for the large-scale project required for the 4% LIHTC funding scenario. Proximity to the Mountain Housing Opportunities affordable housing project (Glen Rock Apartments) clusters low income housing in one location. A mixedincome housing model would help balance out this density. 35

36 This 244,000 SF, 5.6 acre, 150-foot-deep, city-owned site runs along an inclining Bartlett Street on the far south end of the RAD; not all of it is suitable for the project as the City s intent is to preserve a good deal of it as improved parks and open space for the community. The site s configuration is non-uniform and naturally sloping, making it topographically challenged and perhaps best suited for townhome style housing with parking behind the structures. It is well positioned for a development that can transition uses from the denser, arts-rich commercial and mixed-use structures of Depot Street to a primarily single-family home neighborhood up the hill. Mountain Housing Opportunities (MHO) a well-regarded local affordable housing developer has a mixed-use project, the Glen Rock Apartments, just down the hill and to the west on Depot Street. MHO has leased some of its spaces in its project to artists, though units have not been designed specifically for creative use purposes. The site allows up to three stories of housing plus parking. While situated in the RAD and a city-owned site, the location is more isolated and site attributes do not lend themselves as well to the live/work design and use as the spaces along Riverside Drive. For this reason, it is not the highest scored option in this district. SOUTH SLOPE DISTRICT Like the River Arts District, the South Slope is an Innovation District and as such, an area undergoing transformation. There are significant infrastructure plans in place and a vision of increased density, including commercial, retail, medical offices and housing. The city is calling for 2,800 units of new housing by 2020 and much will be developed in this district. The 2009 Master Plan identified this district as having the most significant opportunities for Downtown redevelopment and growth. The confluence of Southside Avenue, Biltmore Avenue and South Charlotte Street is the southern gateway point into Downtown Asheville. There are no official boundaries to the area, but it is broadly considered to include the Medical District/Mission Health Services Corridor and is also referred to by many in the public as the Brewery District. The area is swiftly becoming a home to new breweries, restaurants and retail and should anticipate extensive private investment in the years to come. The South Slope offers several sites that would solidify affordable artist housing in this growing and easily accessible district. The abundance of planned affordable and market rate housing along with less density of cultural assets than the RAD, make it a viable but potentially less impactful location. 319 Biltmore, Matthews Ford Dealership 36

37 Matthews Ford Dealership, 319 Biltmore Ave. Site Matrix Score: 23 Pros: Cons: Priority site for the City Opportunity to preserve affordable space for creatives in an area that will change significantly over time Close to downtown Large site will accommodate a largescale project Planned concentration of affordable housing Not a cultural district so the project will have less direct impact as an anchor cultural asset The large site will require coordinated development Site acquisition costs may hinder significant affordable housing options and there is already local affordable housing developer interest in the location. This 238,000 SF, 5.48 acre, former dealership, owned by Duke Energy is a high yield site and slated for more than 400 units of housing. The City of Asheville is negotiating an option for this site. Mountain Housing Opportunities which is in development on a nearby public housing project, has its eye on additional redevelopment efforts here. The size of this site, the planned housing density and its relative distance to cultural assets makes it, like other sites in the South Slope, less of a priority than other options presented. 6-8 MLK Drive 6-8 Martin Luther King Jr. Drive Site Matrix Score: 17.5 Pros: Pros: Family friendly location with proximity to Family single-family friendly location home neighborhood with proximity which to single-family if the market home study neighborhood reveals an abundance which if the of market artist household study reveals with an children, abundance could of artist be welcome household with City children, owned could site be which welcome offers greater opportunity City owned for site an which amenable offers site greater control process opportunity for an amenable site control Opportunity process to secure space for artists near Opportunity Downtown secure space for artists near Downtown Cons: Cons: The primarily single-family residential area The primarily does not single-family offer the synergy residential of existing area does creative not offer assets the synergy or visibility of for artists existing creative assets or visibility for Site artists size may be limiting for a largescale Site size development may be limiting necessary for a large- for the 4% scale LIHTC development funding model necessary Asheland for the Avenue 4% LIHTC funding model Asheland Avenue 37

38 149 Asheland Avenue Parcels Site Matrix Score: 20 Pros: A good transition location from residential to commercial uses City owned site in a developing area Access to the Greenway expansion which is a good residential transportation facility Access to Downtown Cons: Site is small and conducive for a smallscale artist housing project but not a 4% LIHTC model project; would require private land assembly Site is topographically challenging Not close to other cultural assets and would not anchor a planned cultural district These vacant city-owned or optioned parcels in the South Slope District are large enough for a potential small or moderate scale mixed-use Artspace project at 42,688 sq. ft. (.98 acres) and 47,480 sq. ft. (1.09 acres), respectively. These sites are on the small side but there may be some opportunity to assemble privately-owned sites adjacent to the Asheland Avenue parcel if needed to fulfill a large project vision. However, as noted earlier, the density of affordable housing planned for this area added to what currently exists, is a detractor. While an affordable artist live/work project in Asheville would most likely follow a 4% LIHTC rather than a 9% LIHTC model, reducing the likelihood of funder concern over the concentrated low-income housing, local residents may take issue with it. Generally, these sites should remain in consideration, but with some reservations. CENTRAL ASHEVILLE CORRIDOR Just north of Downtown, halfway to the UNC Asheville campus, a commercial corridor runs along Merrimon Avenue/N. Highway 25, and edges the eclectic and diverse Five Points neighborhood. While art spaces may be a complementary fit within this neighborhood, selfdescribed by its neighborhood association as home to many artists, activists, musicians and photographers, we looked at only one site here. Historic Fire House This site includes the approximately 6,070 sq. ft. historic structure on a 14,375 SF/.33-acre parcel. Owned by the city, this site is adjacent to a privately owned two-story brick structure located at 290 Merrimon Avenue, that was for sale at the time of our visit. This second structure, originally a single-family home, has been used most recently for office/commercial purposes. The two sites could be combined to form a larger complex. This property however, as improved, is too small for what we believe will prove to be a significant arts market. The location is also not one that would align with key city redevelopment priorities or act as a catalyst to an arts district. For these reasons, we do not consider it a viable option for the mixed-use, artist live/work concept being explored. Although it may be appropriate for other types of creative programming and creative business space uses. 38

39 Historic Fire House, 300 Merrimon Ave Site Matrix Score: N/A, not supportive of Project Concept Pros: Cons: Diverse neighborhood Mixed-use area Historic structure City-owned property Too small for the Project Concept but could lend itself well to other creative business and organization uses Not a priority affordable housing development site for the City UNC ASHEVILLE (UNCA) UNC Asheville is the only dedicated liberal arts institution in the UNC system. It and its approximately 3,800 undergraduate students add to the rich arts and cultural fabric of Asheville. The primary campus is north of Downtown in a topographically diverse area hidden among the hills, trees and residential pockets. The largest site under consideration is adjacent to the historic Montford neighborhood. This historic district was the first to gentrify in the area with high value bed and breakfasts scattered among the older homes. Many of the historic homes were renovated in recent years highlighting the disparity between this node and the lowincome areas and adjacent affordable housing projects. While it may feel secluded it is only three miles from the heart of the River Arts District and less than two miles to the core of Downtown. Its presence has been extended to Riverside Drive through its STEAM Studio at the RAMP. This river-adjacent pocket of creative activity sits like a northern endcap to the RAD and includes WNC Dance Academy, an arts supply store and other creative businesses, artists and makers. New investment and infrastructure improvements, like in many of the areas we toured, are planned or underway here. STEAM Studio Several sites owned by UNCA/the State of North Carolina and the UNC Asheville Foundation were included in our tour for future artist live/work and other creative space considerations. It is not uncommon for Artspace to consider land held by universities or partnerships with institution of higher education. It seems 525 Broadway, 90 Zillicoa and adjacent property Site Matrix Score: 25 Pros: Cons: A highly visible site and gateway to the UNCA campus The educational context could offer opportunities for interesting partnerships, programming and collaborations for artists and tenants Sizable site would accommodate the full Project Concept The current ownership structure between UNCA and the State of North Carolina, suggests the potential for a more complicated transaction process than with a city owned site Project would be a destination rather than a catalyst which could be more difficult for commercial tenants 39

40 particularly appropriate in the case of Asheville where so much of the curriculum is synergistic and where there is a history of partnerships between the university and community organizations and nonprofits, most notably CCCD. Even so, land transactions and partnerships with universities are not free of challenges. Typically, timing, approval processes and the complications of state ownership are the areas that slow momentum. Our UNCA hosts were enthusiastic about the opportunity however, and with a strategic plan completed and a master plan underway may be better positioned than many to entertain a path forward. Continued conversations are warranted as a secondary option to the River Arts District, but even if a mixed-use artist housing project in the model of an Artspace project is not sited here, the overall UNCA plan is well suited to complementary artist space development efforts. These parcels together total twenty-two acres and will be the site of a larger development within which, artist housing could be considered. The site had been slated for a children s science museum ( The Health Adventure ) but the effort faltered at the beginning of the recession, when the money could not be raised for what was a $28 million project. This was a difficult failing that has affected the community, including those involved with philanthropic support. The university subsequently acquired the property and is interested in serving a community purpose within a portion of the site. There are ideas for a potential performing arts center as one option. It is a very prominent site and visible from I-26, a major transportation corridor for the City. It is also considered a gateway into the UNCA campus. The three adjacent parcels include vacant 36 Vivian Street, corner of Dortch and Vivian Site Matrix Score: N/A, not supportive of Project Concept Pros: UNCA Vacant Site Cons: A primarily single-family home neighborhood and secluded offering privacy and a non-urban environment that may appeal to some artists Possible land swap scenario to be further explored Possible location for an artist in residency and working studios Not conducive to commercial uses and lacks visibility The project density required for a 4% LIHTC funding scenario is not supported Not close to other cultural assets land and existing structures. The Odyssey School which sits on a six-acre parcel, will remain owned by the State, but rent from a future tenant will go to the University. The University is preparing an RFP for land development which will align with their current strategic plan. Mixed-use artist housing and spaces for university arts programs, including the Performing Arts Center was discussed as a part of the mixture that might be located on this site. 40 This site is comprised of two parcels and is nestled deeply into a wooded, single-family home area south of the main campus and east of the previous UNCA development opportunity. New road infrastructure is planned to make the vacant grassy parcel more directly connected to campus. Currently a series of

41 winding, narrow residential roads provide the primary access. The location while not far from RAMP, and the greenway, feels far removed from cultural assets and would not provide a catalytic benefit to other creative space development in the immediate area. It may also not meet some affordable housing funding criteria if walkability to amenities like transit are emphasized. While it may offer opportunity for artist-inresidency or working studio spaces, live/work housing would be better situated elsewhere. There is the potential for a land swap which is an option yet to be explored. DOWNTOWN ASHEVILLE Much of downtown Asheville has become a tourism center with restaurants, craft bars, retail and entertainment all within a walkable footprint. While the offerings retain a distinctly creative and often local vibe, the days of artists living and working in affordable spaces in the core, are long gone. Likewise, the opportunity to purchase privately held land, improve it and lease it at affordable rates back to the creative community has passed. The fact that The Center for Craft, Creativity & Design secured a prominent foothold with space to spare is a remarkable feat. They are well situated with ample opportunity to consider how, through this asset, they might grow their programs and partnerships in a way that best serves their mission and the community. The idea of introducing affordable artist live/work space into their phased vision was one of the priority options to be explored as a part of this visit. There was one publicly held Downtown high-yield parcel that was on the site tour. On the outskirts of the highly developed core, it is a site that once re-imagined will help set the tone for future revitalization of this important entry point into Downtown. Not yet considered pedestrian friendly, an increase in density and growth in accordance with City planning for the area over the coming years will change that. ABC Site One other parcel, not included on the list of sites to review, came up during our public meeting. It is a reportedly contentious long-vacant, one-acre, opportunity on Haywood and community members and the City are in a process of determining the development direction that best addresses the interests of all parties. It is not a consideration as a part of this study. The City-owned ABC Site with City Fleet Garage and Maintenance buildings and the privately owned CCCD site are however, and described below: ABC Site + Fleet/ Maintenance, Charlotte Street Site Matrix Score: 25 Pros: Cons: Proximity to Downtown and visibility Secures space for artist in this important Gateway Large enough to accommodate the Project Concept An extended acquisition timeline for the sites to be available 41

42 A high yield site, these combined parcels measure 328,500 sq. ft. total, or 7.56 acres and as the gateway point into Downtown Asheville, will eventually be home to thousands of new units of housing and increased commercial density. The site is within walking distance, albeit, uphill, of the core downtown including creative businesses and cultural assets. While an interesting opportunity to situate artists at this important gateway into Downtown before the area transforms, the timeline for these opportunity sites are linked to the planned relocation of an existing city garage and maintenance center which could keep the site tied up The Center for Craft, Creativity & Design (CCCD) 67 Broadway Street Site Matrix Score: 25 Pros: Cons: Reintroduces affordable artist space into Downtown Strong synergy with CCCD mission and expansion plans Highly visible location Site is too small for the Project Concept (although appropriate for a smaller scale vision) CCCD may be better served by a market rate expansion that will spin-off income to support their mission and long-term sustainability for 3-5 years. The city leases 179 Charlotte to ABC Liquors and while the City wants to see the site redeveloped to more dense uses, relocation of this commercial tenant outside of a lease expiration or permitted non-renewal, would trigger relocation fees and complications that are not optimal when creating affordable housing. Given these factors, with emphasis on the extended timeline, this combination site is not an immediate opportunity or top priority. However, monitoring the future of the site is recommended. This nonprofit-owned facility serves the CCCD s primary programs and exhibitions. Additionally, the vision for the center and its impact are expanding through the realization of a creative campus concept known as The Hive AVL. The four-phase reinvention and expansion is already partially implemented and when complete will offer within the existing building: co-working and colocation for creative professionals and organizations; non-traditional meeting and event spaces including a roof terrace; a makerspace/fab-lab programmed in a partnership with UNCA; a 200-person auditorium; and, a final phase of new construction above parking, that could introduce artist housing and studio/work spaces into the campus. This new construction phase is the focus of this site opportunity. CCCD Garage and Site The parking deck, upon which the new construction would be built is 5,000 sq. ft. (0.11 acre) while the whole parcel is.36 acres. The zoning will allow up to ten stories. The re-introduction of live/work space 42

43 and studios for working artists into downtown and in the context of this highly visible and vibrant facility is exciting. However, during the course of our visit, it became evident that the best real estate play for the site would be a market rate development that would spin-off revenue back to CCCD. This strategy would help ensure long-term sustainability for the center and its mission. However, we do feel that even within the context of a market rate development, goals of serving artists needs for affordable space could still be delivered. Artist-in-residency and working studio spaces would be especially appropriate. Site Assessment Summary In summary, we were impressed with the abundance of opportunities to introduce a new affordable, mixeduse artist live/work project to Asheville through a public or private acquisition, long-term lease or other partnership. While we believe that siting such a facility in the River Arts District would be most appropriate and help to ensure that artists remain in this vibrant and growing area, other sites are not ruled out in the event something in the RAD cannot be feasibly developed. Next steps for site selection include: A deeper dive following an Arts Market Study in which the project size, concept and funding will come into greater focus. During a subsequent predevelopment phase, priority sites can be fully vetted, site control negotiated and necessary due-diligence conducted. We recommend monitoring the city-owned, UNCA and CCCD opportunity sites (Riverside Drive properties as a priority) for any materials changes (e.g. RFP s, site transactions, formalized development plans, site preparation progress, etc.) that may impact availability and feasibility. Identify developers and property owners who may not have participated in the focus groups, but whom may have property or plans that could help advance space for the creative sector. There is a lot of real estate activity happening right now, and while much of it may be market rate development, there are also a lot of creative-focused and community-minded efforts underway. It is important to identify developers who may use this study or future Arts Market Study data to plan new space for the creative sector or who may make good partners in this effort. Identify and track any new sites that become available. Particularly those that align with city redevelopment efforts in Innovation Districts, including the RAD. 43

44 Local Leadership Local leadership support is critical to the success of an Artspace project. Without someone on the ground who can advocate effectively for the project, open doors, and keep lines of communication open between the developer and the community, there is little chance of success. Artspace evaluates the capacity of local leaders to help move a project forward by considering how well the leadership pool is defined by the following characteristics: Elected officials who publicly voice support for an effort and are willing to prioritize a project for predevelopment and development resources including funding and site control. Support may also be shown through a willingness and ability to help strategize broad civic support. City manager, housing, community/economic development and/or arts/culture departments staff, who exhibit creative thinking and problem-solving skills, deep knowledge in their specific fields and experience with complex private/public real estate projects. Additionally, staff who are most helpful with advancing projects, vocally support the concept and openly strategize the most effective paths forward. Staff capacity is also measured by whether the project aligns with departmental plans and priorities that are underway or can be implemented within a 1 to 2-year time frame. Private sector leaders who are experts in their field or area of focus, and who are well respected and demographically reflective of the community. These characteristics make them most effective in their roles as ambassadors, funders, partners, connectors, and advisors who can share insight about local culture, and protocols. We were genuinely pleased with the leadership from both the public and private sectors. The City of Asheville s Economic and Community Development Department, led by Sam Powers, has a strong staff of very competent and passionate individuals who have the ability to move an initiative forward if desired. The Civic Leadership focus group, was very strong as well. The group listened carefully to the Artspace presentation, asked good questions, and thoughtfully discussed the hows and whys of pursuing this type of initiative. Recommendations from this group centered on ensuring that a future project is in alignment with civic goals including affordable housing, vibrant street level activity and location in one of the several neighborhoods that are the focus of redevelopment efforts. Strong leadership from the arts community was evident as well. There was a presence from a predominantly grass-roots style of arts leadership, from individual artists to creative businesses. They let it be known, loud and clear, that they would support a project like this and are ready to take action to help mobilize area artists and creatives in any next steps. These groups and individuals generously offered guidance from the planning of the visit, all the way through the entire two-day visit. It will be up to these leaders, and many others, to make it happen. What is Local Leadership? Civic Leadership - Leaders from the public sector, school district, State and County, economic development professionals alike all help Artspace projects through different avenues including allocation of public funds. Business Leadership - Representatives from banks, foundations, colleges, real estate professionals, developers, as well as individual business owners all play an important part in bolstering lively areas and Artspace communities. 44 Arts Community Leadership - Artists and arts advocates are known to do so much with few resources in many communities, supporting an affordable arts facility can further the momentum for the arts and advocates of artist rights.

45 Sustainable Community Impact The most successful creative space facilities whether live/work, mixed-use, or non-residential have a positive and sustainable impact on both the tenants and the community at large. Some of these ideal impacts include: A thoughtful and well-informed project concept, Relevant and innovative design features, A commitment to long-term affordability, Receptive management structure, Meet residential and working space needs, Sustainable and efficient design, Resident involvement in governance and programming, Reflect the unique character of the community, Serve important community goals, and Buy-in of local artists and community members There are three key areas that should be a part of efforts to ensure sustainable community impact. 1. Forming meaningful partnerships to ensure inclusive engagement. We heard from the community and civic leaders that reflecting a diverse community both during the development process and in the final makeup of the resident community is vitally important. The best way to achieve this is to invite leaders of culturally specific groups and organizations working in the realm of social equity to have a seat at the table. This would include members of the core group, potential future tenant organizations, and program partners. Green Opportunities and LEAF Streets & Schools were both discussed as being appropriate organizations to include in this conversation. In the Arts Market section of this report we discussed outreach methods to encourage engagement from English is a second language participants. Inclusive engagement efforts should start early and remain constant. This project can be a model for other endeavors and an opportunity to help heal wounds of disenfranchisement and importantly retain and attract artists of diverse backgrounds in Asheville. 2. Identifying a site appropriate to the retention of an authentic arts community. While longterm, sustainable community impact begins with a site that can deliver affordable space due to the terms of acquisition or site control, in Asheville, the identity of the place plays an equal role. The prominent River Arts District and other identifiable creative nodes are at risk of losing the very artists that make these areas distinct. Asheville will benefit by offering long-term affordable space in one of these key areas including RAD and Downtown Asheville. By locating affordable space for artists in other areas that will see great transformation in the coming years, such as underutilized areas of the South Slope, there is an argument for the impact of a new project that preserves identity as a priority, rather than catalyzes a new one. 3. Complementing rather than competing with active creative space developments. There is a significant amount of development occurring in Asheville. Much of it is geared toward creative and innovative spaces and uses. We recommend early and ongoing conversations with some of the 45

46 more prominent private developers and entrepreneurs working in this realm. These include the RAMP development, institutions like UNCA, nonprofits such as CCCD, and affordable housing developers including MHO. Keeping open lines of communication will be in the benefit of any future project. TAKING A MEASURE OF CREATIVE PLACEMAKING No single project will serve all the needs, so bringing likeminded developers to the table and offering market-based information can help plant the seeds for multiple space initiatives. Additionally, conversations may open doors to new site opportunities, funding, and partnerships that can strengthen a project s feasibility and long-term community impact. This report summarizes the findings from two studies, How Artist Space Matters and How Art Spaces Matter II, which examine the long-term impact and sustainability of five Artspace projects: the Northern Warehouse Artists Cooperative, the Tilsner Artists Cooperative, the Traffic Zone Center for Visual Art (all in MN), the Tashiro Kaplan Artist Lofts (Seattle, WA), and the Riverside Artist Lofts (Reno, NV). These studies found that creative spaces benefit communities by: Animating deteriorated historic structures and/or underutilized spaces. Bringing vacant and/or underutilized spaces back on the tax rolls and boosting area property values. Fostering the safety and livability of neighborhoods without evidence of gentrification-led displacement. Anchoring arts districts and expanding public access to the art. Attracting additional artists, arts businesses, organizations, and supporting non-arts businesses to the area. Read the full report at: org/ideas-insights/artspace-publications/takingmeasure-creative-placemaking 46

47 Recommendations Artspace enthusiastically recommends that the Core Group continue to a next phase of feasibility for an affordable, mixed-use artist housing project in the model of an Artspace project. We anticipate that there is a substantial market for individual artist live/work and studio only space that will be revealed through an Arts Market Study (AMS) (Appendix III). In keeping with the concept of a mixed-use project that could be home to organizations and small creative businesses, it is recommended to conduct a deeper assessment on commercial needs as well. Information can be captured in a second online survey implemented in tandem with a survey of individual artists. Conduct an Arts Market Study to test the proposed mixed-use, 80 unit live/work project concept and to provide quantifiable data that may encourage multiple affordable artist space developments Refine the project concept, per Arts Market Study results Grow the Core Group to reflect greater diversity Transition to a predevelopment phase that would include: Site selection, control and due diligence Responsive pro-forma development that considers the market, site and funding complexities (multiple scenarios would be tested) Development team and partner formation Architectural design Funding assembly Help interested local partners and developers advance multiple creative space initiatives that address the local need and affordability parameters Other initiatives that would help to support the creative sector to consider include: Develop a Cultural Plan Arts overlays that place special requirements on new developments or offer special development incentives in identified cultural districts. For example, require affordable creative spaces in new market rate developments; offer special use permits for nonconforming creative spaces that meet a safety threshold or streamlining approval process; or waive fees for projects that include affordable creative space. Once more is known about the market demand the Project Concept can be refined, the most suitable site confirmed, partnerships formalized and financial models created and tested. The areas of focus in this report are pieces of a development puzzle. Every piece is connected. Move one and it affects another. It is not a linear process, however this assessment attempts to look at it that way. Each piece of the puzzle is viewed separately, in order to set the foundation for next steps where all the pieces must begin to come back together, forming a path to a final project. A full description of the Path to an Artspace project can be found in Appendix VI. While this process is geared toward the realization of an Artspace project, the information and process is relevant to local private developers who may be motivated to undertake a project themselves. Whatever path the Core Group chooses to pursue with the information provided in this report, we believe that a Cultural Planning process and a strategy for inclusive outreach should be among the next steps pursued by the city and/or community, as both will help to advance opportunities for the creative sector. We look forward to providing any further assistance and hope to have the opportunity to assist in moving the vision for new affordable live/work artist space forward in Asheville, North Carolina. 47

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49 Appendix I Acknowledgments The Artspace team visited Asheville from March 21-23, The team met with members of the Core Group, a local stakeholder group formed for the purposes of this study and for moving a project forward. The team visited priority neighborhoods and publicly and privately-owned opportunity sites, met with five focus groups, held three working group meetings with key leaders, and conducted a public meeting. Artspace was represented by Wendy Holmes, Senior Vice President Consulting and Strategic Partnerships and Teri Deaver, Vice President, Consulting and Strategic Partnerships. Artspace worked closely with Mike Marcus, Assistant Director of CCCD who coordinated the visit and enabled Artspace to engage the Core Group and community stakeholders in the process. Core Group Members Asheville Mayor Esther Manheimer The Center for Craft, Creativity & Design Asheville Area Chamber of Commerce MHAworks City of Asheville The Community Foundation of Western North Carolina UNC Asheville HomeTrust Bank Study Funders City of Asheville The Community Foundation of Western North Carolina Ted & Terry Van Duyn Duke Energy Foundation Artspace s observations and recommendations are based on what we saw and heard during our visit in Asheville. It is also informed by our experience working on other projects in North Carolina, and in other cities and states around the country that have invested in affordable housing and facilities for their creative sectors. Countrywide the residents of Artspace Projects Inc. buildings range from veterans, formerly homeless, retirees, service workers, teachers, parents and they happen to be artists. They are likely to be earning their income from something other than their art. We firmly believe that artist housing is workforce housing and as, good planners, practitioners, and housing advocates we should ensure there is a plan for the creatives and artists that made the community a vibrant place to begin with. Artspace s 30 plus years of consulting experience provides useful context for evaluating the feasibility and importance of artist spaces in Asheville. We are grateful to the community, arts, and business leaders who through their planning and participation laid the groundwork for a successful three days. We extend a particularly big thank you to Mike Marcus for inviting Artspace to Asheville along with his colleague and CCCD Executive Director, Stephanie Moore. CCCD played a major convening role in making this visit happen and bringing together the leadership and influencers to give Artspace both information and perspective on Asheville s creative sector as well as the community at-large. We would also like to thank Kit Cramer, CEO and President of the Asheville Area Chamber of Commerce, who was an active participant and helped lead the effort and galvanize 49

50 local support for the study along with CCCD. In addition, we are very appreciative of City of Asheville and University of North Carolina Asheville (UNCA) staff leaders in real estate, planning and economic development who led the site tours and provided information and insight into relevant programs and policies. This includes Sam Powers, Director of Community & Economic Development and his team, John Pierce, Vice Chancellor, Administration and Finance at UNCA and the members of the Core Group who gave their time to provide valuable insight during the three-day visit. The Community Foundation of Western North Carolina also played a key leadership role leading up to and during the Preliminary Feasibility Visit. This collection of local leadership is vital to the success of any future project Artspace might undertake. We acknowledge Dana Stonestreet, Chairman, President and CEO of HomeTrust Bank, for his leadership role in the funding and financing focus group and for helping host the Leadership Reception at CCCD on March 21 in partnership with the Federal Home Loan Bank of Atlanta, as a kick-off event for the study. This study would not have been possible without the generous financial support of: The City of Asheville, The Community Foundation of Western North Carolina, Ted & Terry Van Duyn, and Duke Energy Foundation. 50

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52 Appendix II Site Matrix Site Riverside Properties Bartlett Matthew Ford Dealership ABC/Fleet Maintenance MLK Drive Address Riverside Drive 170th Block 319 Biltmore Avenue 171,173,179 Charlotte St. PIN # Neighborhood River Arts District River Arts District South Slope/ Medical District South Slope South Slope Neighborhood Conditions Excellent: Opportunity to retain artists in the RAD Good: Not in core industrial area; but walking distance to cultural assets Good: Opportunity to secure longterm space for artists close to Downtown; currently low density commercial, but will change Good: Opportunity to secure longterm space for artists close to Downtown; currently low density commercial, but will change Poor: Opportunity to secure longterm space for artists close to Downtown; primarily residential, single-family home area Size/Configuration Excellent: Two Parcels 1.03 and.73 acres Good: One large parcel; topography suggests that in spite of large size; a single development is appropriate Excellent: 5.48 acres; would be part of larger development or parceled off site Excellent: 3-parcel site totaling 7.5 acres; high yield site; would be a part of larger development or parceled off site Good: 0.98 acres; sufficient for a mixed-use artist live/work facility Site Conditions Zoning and Land Use Fair: Adjacent to freight RR; in a Flood Hazard Zone; historic smoke stack and preservation of open space required; Brownfields agreement on property Good: Adherence to form based code; housing an allowed use; 6 stories allowed Fair: Topography is awkward Excellent: 3 stories allowed; bridge between commercial and more residential uses Good: Traditional commercial site Fair: Site and general area slated for increased density incl. affordable and market rate housing; concentrated with MHO; project on backside of site; mixeduse allowable Good: Traditional commercial site; some demolition would be required if site is not clear Fair: Site is 3-5 years away from developable; must relocate city maintenance fleet; a current commercial tenant is under lease Unknown Fair: Primarily single-family homes; introducing a dense multiuse artist/live work project is out of character Parking Excellent: Parking could be accommodated on the first floor with 5 stories above Excellent: Size of the site would accommodate surface parking Excellent: The large site will accommodate parking Excellent: The large site will accommodate parking Fair: Site size would require parking below Acquisition Excellent: City-Owned Site Excellent: City-Owned Site Potential for Sustained Community Impact Alignment With Community/Civic Priorities Other Considerations Summary: Excellent = 4 Good = 3 Fair = 2 Poor = 1 (Unknown = 2.5) Total Score Excellent: Retains artists in RAD; access for visitors/tourism; allows for private uninterrupted work Excellent: Priority area with civic investment in Greenways and tourism; development in a difficult to develop area Located in a QCT; adjacent to highest poverty in City Excellent: Retains artists in RAD; proximity to Depot Street's commercial arts activity Excellent: Priority area for the city Less than a block from MHO affordable housing project, which includes some artists in traditional units Fair: City-Option Site with RFP or direct negotiation possible; affordable housing may not be possible Fair: Need for affordable space for artists in the area with easy access to Downtown; one of many new mixed-use projects and not help specifically activate Good: Priority area for housing and redevelopment; it may not be as aligned with creative sector priorities Current low density and commercial uses; arts building will have less impact than other areas Good: City-owned; site is 3-5 years from being developed; likely an RFP Fair: Need for affordable space for artists in the area with easy access to Downtown; one of many new mixed-use projects and not help specifically activate Excellent: This is a priority area for housing and redevelopment Current low density and commercial uses; arts building will have less impact than other areas Excellent: City-owned site Poor: Site is in low-density residential neighborhood; South Slope planning for housing growth, including low-income housing Fair: Area is a priority for greater density and new development; alignment with creative sector or neighborhood goals less clear

53 Site Asheland Ave. Historic Fire House Broadway/Zillicoa Vanderbilt Place CCCD Address PIN # Merrimon Ave. 525 Broadway 90 Zillcoa 36 Vivian Street and corner of Vivian and Dortch 67 Broadway Street Neighborhood South Slope/CBD Five Points Neighborhood UNCA UNCA Downtown Neighborhood Conditions Size/Configuration Good: Expansion area with access to Greenway expansion Fair: 1.09 acres; sufficient for a small live/work mixed-use project Good: Diverse and active residential and mixed-use area Poor: 0.33 acres with a historic building (approx sq. ft.) even with the potential of assembling sites; this option is too small Good: Gateway into the college; a non-commercial location, it would be more of a destination than a catalyst project Excellent: 22 acre site; project would be component of a larger development Poor: Land in a primarily single, family residential area; while access is changing it does not provide visibility N/A Excellent: At the center of commercial and nonprofit arts activity Fair: New construction on parking and expansion of CCCD's existing structure; floor plate of 5000 SF; site likely doesn't accommodate the units in Site Conditions Poor: Sloping site with topographical issues N/A - historic structure Good: Would vary depending on the location, but has been slated for similar scale development N/A Good: High density infill construction Zoning and Land Use Good: This part of South Slope is transitioning from commercial to residential; with residential uses preferred; could support 24 units per proposal N/A Good: Slated for a Children's Museum; adjacent to a singlefamily home neighborhood; institutional uses incl. student housing are under consideration N/A Excellent: mixed-use would be allowable Parking Fair: Parking at one per unit could be supported behind a new structure N/A Excellent: ample opportunity for parking N/A Poor: Site not likely to accommodate parking required and any replacement parking needed Acquisition Excellent: City-owned site Excellent: City-owned site Potential for Sustained Community Impact Alignment With Community/Civic Priorities Other Considerations Summary: Excellent = 4 Good = 3 Fair = 2 Poor = 1 (Unknown = 2.5) Total Score Fair: Need for affordable space for artists in the area with easy access to Downtown; one of many new mixed-use projects and not help specifically activate Good: Aligns with City goals for new affordable housing, density; less alignment to sector goals; could be tested in survey Fair: Other arts and creative business uses considered for this site have a positive impact on the community Poor: Not in a high priority development area or arts district This site may be an option for other creative space uses Fair: Sites owned by UNCA/State of NC/UNCA Foundation; UNCA reps are enthusiastic; site control could be complicated Good: Impact likely to center on advancing community uses on the UNCA campus Excellent: City is supportive of affordable housing at this location; strong priority for UNCA Fair: UNCA owned site, while willing still complicated; land swap path also complicated Poor: UNCA land that does not provide the visibility preferred Poor: UNCA land that does not provide the visibility preferred This site may be an option for an artist in residency or other creative space uses; there is a potential land swap scenario to Excellent: Core group partner leading the vision for new space; acquisition/site control a friendly negotiation Excellent: Long term affordable live/work space in Downtown, in the context of CCCD, benefits the creative sector substantially Good: Site aligns with creative sector priorities; not area of redevelopment for the City; dearth of affordable housing options in Downtown A market rate development may better offer a steady stream of income for programs and longterm building costs 20 N/A 25 N/A 25 53

54 Appendix III Arts Market Study Overview An in-depth Arts Market Study is a required early step in the predevelopment phase of an Artspace live/ work or mixed-use project, and is a step we highly recommend regardless of the community s choice of developer or project model. The Arts Market Study includes an artist space needs survey ( Artist Survey ) for live/work project concepts and sometimes also includes either a survey of creative businesses and arts/cultural nonprofits in the area ( Organization/Business Survey ) or a series of in-depth interviews and focus groups with the same. This second survey or alternative method is appropriate for mixed-use projects that anticipate significant space for non-residential commercial or nonprofit uses. In both instances, Artspace starts with a proprietary survey template that we developed 16 years ago and continually revise. We then modify it with community input to reflect unique characteristics of the proposed project and local arts scene, and host it online for up to eight weeks. To date, we have used this survey instrument in more than 70 communities and received responses from more than 30,000 individual artists. The primary goal of the survey is to determine the size and nature of the market for a live/work or mixeduse arts project in the community. We also use it to demonstrate a need for affordable rental housing sufficient to satisfy the various public and private entities that make financial investments in our projects. The Artist Survey gathers a wealth of data about the area s creatives including their age, gender, ethnicity, household size, and other demographic information; the arts activities they practice and the arts facility features of most interest to them; their current income range and the percentage of it generated by art; their current studio or work space arrangement; and how much they are willing to pay for combined housing and studio space or studio space alone. The Artist Survey tells us with reasonable accuracy how many live/work units the local arts community can fill. It can also tell us such things as which neighborhoods are of greatest interest and what types of shared spaces and amenities to include in the project and whether a project funded with affordable housing dollars would align with interested artists household incomes and need for affordable living space. We determine the recommended maximum residential unit count of a proposed project by taking the number of artists who express interest in relocating to the project if it is built and dividing that number by three. For example, if 120 artists meet both criteria, we plan for a 40-unit project. This conservative triple redundancy policy ensures that our projects lease up quickly and stay fully occupied over time. Because smaller projects are more expensive in terms of their per unit costs, and more difficult to fund using public subsidies, a 40-unit project is the smallest that Artspace will typically consider if we are to be the developer. If a mixed-use project is under consideration, and the Organization/Business Survey is conducted, the primary objectives of that survey include: Identifying the specific space needs of the interested organizations and businesses as well as their amenity and shared space preferences; Understanding their capacity or readiness to take on new space and what rents they can afford; and Developing a comprehensive matrix of interested entities that can serve as a starting place for space design planning and lease discussions. 54 Not in all cases is a Survey of Organizations and Businesses necessary to inform a mixed-use project concept. An alternative approach that can help deepen the relationships that lead to a successful mixeduse project involves in-depth interviews and focus groups with known and interested entities that need space in which to conduct their business and programs.

55 Appendix IV Asheville Plan Document Review Asheville City Development Plan 2025 Comprehensive Plan, 2003 Adopted in Implemented many goals of this plan including zoning and design guidelines in RAD, downtown, and a multimodal plan. Population growth has outpaced projections in this plan. Affordable housing listed as a concern, leading to the creation of the Affordable Housing Advisory Committee. Public Art Master Plan Asheville Parks and Recreation, 2001 The plan establishes the role of the Public Art Board and establishes committees to address permanent art, temporary art, and collections management. Sets guidelines for financing/acquisition of public art, artist selection, and criteria for selecting public art pieces. Formalizes the role of art in the public space. The Wilma Dykeman Riverway Masterplan Urban Design Associates, 2004 The plan puts forth a river revitalization strategy hinged on establishing and activating a continuous 17- mile greenway between the French Broad and Swannanoa Rivers. Key to this plan is a linkage to the River Arts District. Support of the creative sector and recommendations for mixed-use housing are important elements. Affordable Housing Plan for the City of Asheville Mayor s Task Force on Affordable Housing, 2008 Local housing market trends and addresses the affordability crisis in Asheville. Findings included that relatively low incomes and high housings costs are the main cause for concern. 25% of homes are non-primary residences. Plan was never adopted, but initiatives have been implemented and more studies followed. Asheville Downtown Master Plan Goody Clancy, 2009 Builds on the 2003 Comp Plan and creates a 20-year vision. Focuses on new development downtown and sustaining the dynamic and diverse culture and economy. Enhancing the arts and riverfront downtown are major strategies in the plan. Parks, Recreation, & Cultural Arts Master Plan GreenPlay, 2009 Among the strategic goals was to the strengthen the structure of public and cultural arts and build public/ organizational capacity for the arts. Riverside Drive Development Plan (RDDP) City of Asheville, Office of Economic Development and Asheville Area Riverfront Redevelopment Commission, 2014 One of six planning and development initiatives for the East of the Riverway, the plan offers preferred scenarios for redevelopment of key parcels along Riverside Drive at the near center point of the Wilma Dykeman Riverway. Implementation objectives include balanced and thoughtful revitalization of the parcels in the context of the River Arts District. 55

56 Supporting Equitable Development: Building Blocks for Sustainable Communities EPA Building Blocks Grant, 2014 Public input plan addressing issues of equity and gentrification. Plan focused on linking African American community into new development, building trust and collaboration among local constituencies and the city and improving community development opportunities. Alternatives to Gentrification in the East of the Riverway Sasha Vrtunski, AICP, 2014 Recommended steps to take to ensure long term affordability in the East of Riverway area. Incorporated a public meeting component to their approach. Using economic analysis and an assessment of neighborhood needs identified issues facing minorities, artists, and overall affordability. Recommendations included inclusionary zoning with an affordable housing trust fund component that could fund affordable developments including live-work cooperatives for artists. Housing Needs Assessment Asheville, NC Bowen National Research, 2015 Studied the four-county region and all associated housing and demographic trends Historic Preservation Master Plan for Asheville and Buncombe County, NC Historic Resources Commission, 2015 Review and inventory of 4,400 historic properties, and promotes the importance of historic preservation in the fabric of all of Asheville s placemaking efforts. It encourages landmark designation and mentions using historic buildings for affordable housing. HUD Comprehensive Housing Market Analysis Office of Policy Development and Research, 2016 Analysis of the housing market trends in the Asheville, NC Metropolitan Statistical Area. Noted demand in the for-sale and rental market, vacancies, labor force, and expected population/household growth. Arts and Culture Economic Development Asheville Chamber of Commerce Statistics on the creative economy and its economic influence. The arts and cultural economy has attracted new businesses, talent, tourists, innovation, and helps conserve and preserve the history and heritage of Buncombe County. Arts & Economic Prosperity 5 (AEP 5) in Buncombe County Americans for the Arts, 2017 Documents the economic impact of the nonprofit arts and culture sector in Buncombe County. Used input-output analysis to determine the direct, indirect, and induced economic impact of the spending by the County s nonprofit arts and cultural organizations and their audiences. Links the importance of the cultural sector with the tourism economy. Living Asheville: A Comprehensive Plan for Our Future 2036 Vision, Skidmore, Owings & Merrill SOM, 2017 Update will include more on affordable housing, parks and greenspace. Currently in the public engagement and feedback process. Over 13,000 respondents into the plan. Envisioned as a 30-year plan. 6 themes are: Livable built environment, harmony with the natural environment, resilient economy, interwoven equity, healthy community, responsibility regionalism. 56

57 Appendix V PFV Questionnaire Results At the beginning of the focus group meeting of artists and arts organizations, a Creative Space Needs Questionnaire was distributed. Each participant was asked to answer the questions as completely as possible. The focus of the questionnaire was to collect information about individuals or organizations that are interested in renting space in the project. With the understanding that many of the participants would not be in need of space, the group was instructed to skip the questions that do not apply to them and to feel welcome to add comments to the end of the questionnaire. Below is a summary of the results from the 32 artists and creative people who completed the questionnaire: Additional Comments Other comments and concerns furthered expressed the need for affordable artist space in some form. Given the seasonal tourism market, many artists young and old have had to take on a service sector job to make ends meet. Comments also stated that Asheville would benefit from a variety of artist spaces, given the high number of creatives, and that a common artist gathering space would be well received. Participants echoed fears about the River Arts District turning into a generic shopping district and the need to keep the area centered around the arts. Additionally, one respondent mentioned that there should be more outreach to artists of color. 57

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60 Appendix VI Path of an Artspace Project THE PATH OF AN ARTSPACE PROJECT Rome wasn t built in a day, and neither is an Artspace project. In fact, a typical Artspace live/work project takes from four to seven years to complete. Although no two projects are precisely alike, they all travel a similar path through the development process. Here is a brief look at a typical Artspace live/work project as it proceeds from first inquiries through feasibility studies, predevelopment, and development to completion and occupancy. Please note that this is not an exhaustive list of every activity that goes into an Artspace project, and that some actions may occur in a different order. STEP 1: PRELIMINARY FEASIBILITY Overview Information Gathering and Outreach Primary Activities Meet with artists, civic leaders, and other stakeholders Conduct public meeting to introduce Artspace and solicit feedback Tour candidate buildings and/or sites Conduct extended outreach as needed to ensure that people from underrepresented communities are included in the process Deliverables Written report with recommendations for next steps Prerequisites for Moving Forward Demonstrated support from local leadership Critical mass of artists and arts organizations with space needs Established base of financial support Time frame 3-5 months, kicked off by a 2-day visit Cost $25,000 $20,000 60

61 STEP 2: ARTS MARKET SURVEY Overview Assessing the Need Primary Activities Assemble a comprehensive list of artists (and arts organizations, if applicable) in the area Reach out to artists and creative organizations from diverse arts disciplines, ages, ethnic backgrounds, etc., asking them about their space needs Conduct a public meeting to launch the survey and educate the community about the project Analyze and report on survey findings Deliverables Written report with recommendations for next steps Prerequisites for Moving Forward Sufficient number of responses from eligible, interested artists to support an Artspace live/work project Time frame 4-6 months Cost $30,000 (artists only) or $42,500 (artists and arts organizations) 61

62 STEP 3: PREDEVELOPMENT I Overview Determining Project Location and Size Primary Activities Deliverables Prerequisites for Moving Forward Work with City and other stakeholders to establish (a) preliminary project scope and (b) space development program for evaluating building and site capacity Analyze candidate buildings/sites with respect to cost, availability, and other factors impacting their ability to address development program goals Review existing information about potential site(s) to identify key legal, environmental, physical, and financial issues affecting their suitability Negotiate with property owners with goal of obtaining site control agreement Continue outreach to artists and arts organizations Connect with potential creative community partners and commercial tenants Confirmation of development space program and goals Assessment of site suitability and identification of any contingent conditions to be resolved through continued due diligence Site control agreement or update regarding status of site control negotiations Summary of project status Site control agreement with property owner Growing stakeholder/leadership group Both parties agreement on project scope and feasibility Time frame 3-6 months Cost $150,000 62

63 STEP 4: PREDEVELOPMENT II Overview Project Design and Financial Modeling Primary Activities Deliverables Prerequisites for Moving Forward With City participation, establish process for selecting architectural team Confirm development goals and space program with architectural team Engage architect to create conceptual plans and schematic designs Engage contractor or cost consultant to provide pre-construction services Resolve any contingent conditions relating to site control Create capital and operating budgets Obtain proposals and/or letters of interest from lender and equity investor financing partners Prepare and submit Low Income Housing Tax Credit application Submit other financing applications as applicable Maintain excitement for the project within the creative community Encourage and guide local artists to activate the site with arts activities Schematic designs Financial pro-forma detailing capital and operating budgets Preliminary proposals and letters of interest for project mortgage and equity financing Summary of project status Award of Low Income Housing Tax Credits (first or second application) or commitment of alternative funding Time frame months Cost $300,

64 STEP 5: PREDEVELOPMENT III Overview From Tax Credits to Financial Closing Primary Activities Secure final gap funding commitments Raise funds for equity, including private sector philanthropic dollars Complete construction documents and submit permit applications Negotiate construction and permanent loan commitments Negotiate limited partner equity investment commitments Advance project to construction closing Communicate the progress of the project to the creative community to keep up the involvement and excitement Deliverables Successful closing and commencement of construction Time frame 4-6 months Cost $300,000+ STEP 6: CONSTRUCTION Overview Construction and Lease-up Primary Activities Oversee project construction Engage local management company Identify commercial tenants and sign lease agreements Reach out to potential artist tenants, providing education on the application process Conduct residential tenant selection process Deliverables Completed project ready for occupancy Time frame 6-10 months Cost Depends on project (not part of predevelopment contract) 64

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66 Artists at work With affordable space to live and work, our resident artists can unleash their creativity Lively neighborhoods Our projects spur economic activity and dynamic street life in the area. ABOUT ARTSPACE Established in 1979 to serve as an advocate for artists space needs, Artspace effectively fulfilled that mission for nearly a decade. By the late 1980 s, however, it was clear that the problem required a more proactive approach, and Artspace made the leap from advocate to developer. Since then, the scope of Artspace s activities has grown dramatically. Artspace is now a national leader in the field of developing affordable space that meets the needs of artists through the adaptive reuse of historic buildings and new construction. Artspace s first three live/work projects were in Saint Paul: the Northern Warehouse Artists Cooperative (1990), Frogtown Family Lofts (1992), and Tilsner Artists Cooperative (1993). In the mid-1990s, Artspace broadened its mission to include non-residential projects. The first of these, The Traffic Zone Center for Visual Art (1995), transformed an historic bakery in the Minneapolis Warehouse district into 24 studios for mid-career artists. Since then, Artspace has expanded its range of activities to include projects in operation or development in more than 20 states across the nation. In all, these projects represent nearly 2,000 live/work units and millions of square feet of non-residential community and commercial space. Artspace has evolved from a Minnesota organization with a few national projects into a truly national organization based in the Twin Cities, with offices in New York, Los Angeles, Seattle, New Orleans, and Washington D.C. Artspace programs fall in three broad categories: Property Development, Asset Management, and Consulting Services. Sustainable solutions Our projects provide long-term affordable space without ongoing fundraising. 66

67 Property Development Development projects, which typically involve the adaptive reuse of older buildings, but can also involve new construction, are the most visible of Artspace s activities. To date, we have completed more than 41 major projects. A dozen more are under construction or in the development pipeline. Artspace live/work projects are operating from coast to coast. Asset Management Artspace owns or co-owns all of the buildings it develops; our portfolio now comprises more than $600 million worth of real property. We strive to manage our properties so that they will be well-maintained, yet remain affordable to the low-and moderate-income artists for whom they were developed in the first place. Revenues in excess of expenses are set aside for preventive maintenance, commons area improvements and building upgrades. Consulting Services In addition to its roles as developer, owner, and manager, Artspace acts as a consultant to communities, organizations, and individuals seeking information and advice about developing affordable housing and work space for artists, performing arts centers, and cultural districts, often within the context of historic preservation. 67