Preliminary Feasibility Report Charleston Region, South Carolina July 2016 Prepared for the
Artspace Projects, Inc. Offices Minneapolis Los Angeles New Orleans New York Seattle Washington DC 250 Third Avenue North Suite 400 Charleston/North Charleston Region Core Group for Artspace Study Minneapolis, MN 55401 P 612 / 333 / 9012 F 612 / 333 / 9089 artspace.org Adam Parker Bill Medich Chris Fraser David Farren Fletcher Williams Kerri Forrest Kyle Lahm Mark Sloan Michelle Mapp Ray Huff Scott Watson
INTRODUCTION On February 24th and 25th of 2016, Artspace, represented by Wendy Holmes, Senior Vice President of Consulting and Strategic Partnerships and Kathleen Kvern, Senior Director of National Advancement, conducted a Preliminary Feasibility Visit regarding the viability of creating long-term affordable space for the Charleston region s creative sector. The Charleston tri-county metropolitan area has become one of the fastest growing regions on the east coast, with county growth trends suggesting that the area could grow from 680,000 to over 1 million people in the next 15 years. Along with this rapid growth, the issue of affordability has been cited as an important issue, with more than half of renters in the area spending over 30% of their income on housing. This rapid growth of the region has occurred while basic urban infrastructure has lagged behind- most notably in the areas of public transit, food access, and inconsistent quality of K-12 education. Nonetheless, the artistic community is passionate, strong, and diverse with a deep commitment to preserve the arts and culture of this deeply historic and vibrant place. What follows is an executive summary of the full Preliminary Feasibility Report. Regional Observations The region has many opportunities for artists and creatives, including: Available and relatively inexpensive properties A large creative community ripe for coalescing Strong city level leadership The region also faces challenges, such as: Many neighborhoods have become too expensive for the creative sector The South Carolina Qualified Allocation Plan (QAP) for Low Income Housing Tax Credits (LIHTC) favors smaller rural projects Weak transportation networks and food deserts weaken competitiveness of LIHTC applications Private philanthropic resources are limited at the institutional level FINDINGS Project Concept One of the main goals of Artspace s work was to give the communities of Charleston and North Charleston the information they need to develop a viable project concept the vision that drives the project. Based on our findings, we find there is a strong need for long-term affordable space 4
for artists in both Charleston and North Charleston, although for different reasons. In Charleston space is rapidly gentrifying and real estate is at a premium, something that often is unaffordable to the creative sector, either to rent or own. In North Charleston, long-term affordable artist-focused space could help with revitalization efforts by attracting and retaining residential density and improving infrastructure. A mixed-use development that provides residential, working, and artsfocused commercial space that serves as an arts hub where artists can contribute to and help sustain community development is a wonderful fit. Market Need We heard repeatedly that artists need affordable studio/work space, display/performance space, shared creative spaces, and permanent space for existing arts organizations. An Arts Market Survey will provide useful data about the needs of Charleston region artists. We also expect the study will reveal a compelling need for affordable live/work housing, particularly among artist-only households, young artists, and others who are facing rising costs and displacement in Charleston. Site Analysis During a Preliminary Feasibility Visit, Artspace s primary goal is not to select a site but to identify candidates, neighborhoods, buildings, or land for further study should the project move forward. Both Charleston and North Charleston have sites with opportunities as well as challenges relative to a potential project that serves the needs of the region s creative sector. Each city has its unique challenges but below is a quick summary of opportunities we noted as substantial. Charleston. West Ashley. There are many distinct districts and attractive neighborhoods that seem to be poised to be the next frontier of development, although we learned that many say affordability in West Ashley is fleeting and property values are rapidly rising beyond most artists means. Neck of Charleston. Magnolia, a 182-acre plot that has been assembled by the city for redevelopment in the new urbanist approach, has potential for mixed-use artist housing. It is conveniently located in terms of access to the core of the peninsula, with access to bus service and bike trails. The Peninsula. Shaped by economic and physical constraints, this historic hub of the city is already facing significant gentrification, creating both opportunities and limitations. Of particular interest is the possibility of creating visiting artist space in conjunction with the hotel boom, a key interest that arose out of the creative sector focus group. North Charleston. While North Charleston may have fewer restrictions on new/rehab construction and more possibilities for affordable space, its infrastructure weaknesses (lack of strong transit and food desert) may be a barrier in receiving LIHTCs based on South Carolina s 2015 QAP, which places an emphasis on projects near amenities such as grocery stores and transportation corridors. Park Circle. Artists are congregating in the neighborhood, but it is mostly single family homes and property values are increasing. Ashley Shores. An old affordable housing complex is being replaced with a new development. This area s strong roots in jazz music was cited as an example of this neighborhood s attraction for artists and musicians. 5
Historic Downtown/Chicora-Cherokee. This walkable district exudes a hipness and appears to have a proclivity for attracting artists and the creative sector. Several like-minded developments and initiatives are underway. Save for the challenges of transportation and scarcity of access to fresh food, this is an attractive locale. Shipwatch Square. North Charleston is currently seeking proposals for development and is layering very attractive incentives for a development that includes a grocery store. These incentives include low interest loans, bridge financing, the purchase of land for less than market value, etc. Naval Yard. This 1,595-acre former navy base and shipyard has many of the same issues regarding food access and transportation. The recent loss of art facilities has left a once relatively robust arts infrastructure void of current options. Funding/Sustainability Artspace typically partners with the City and philanthropic community in identifying the resources for predevelopment and development, often a combination of Low Income Housing Tax Credits, Community Development Block Grants, HOME funds, Federal Home Loan Bank, tax increment financing, other housing and economic development programs, and private philanthropic support. When considering financial feasibility, it is important to note the multiple points of impact and return on investment a project of this nature could have, including but not limited to economic, blight remediation, adaptive reuse or historic buildings, and infrastructure investment in the cultural economy. We were encouraged during our visit at the possibility of public/private partnership in both Charleston and North Charleston. However, the foundation of a strong and well balanced funding stack are 9% LIHTCs, which would be very challenging to attain for a project of this nature as South Carolina s QAP is currently written. Without the project being awarded the 9% LIHTCs as a financing tool, it would be difficult to build a funding stack that wouldn t be overly reliant on private philanthropy. Local Leadership Local leadership includes not only elected officials but also citizens who are passionate about making their community a better place to live, work and play. Charleston s Mayor Tecklenburg is supportive of the arts and with new leadership at the city level, developing a strong long range comprehensive plan to support affordable space for the arts may be possible. In North Charleston, the Mayor Summey is an advocate for mixed-use creative space and his staff participated in many of our meetings. The support of local leadership is essential to secure state resources, and Artspace senses that both cities would be strong partners in moving a project forward. Sustained Community Impact We think this project has the potential to have a sustained long-term impact. We met with many individuals and organizations that are interested in seizing the moment to bring arts to the city planning table. Ultimately, Artspace projects are local projects. We work with the community at every stage to ensure our site, design, amenities, and non-residential tenants and uses best serve 6
the neighborhood and the region as a whole. If the community s goals for this project include harnessing the transformational power of the arts, then it will find that its own community assets and leaders will play a significant role in realizing this ideal. In addition to developing synergistic ties to other organizations, identifying community-based creative sector commercial tenants, and ensuring that artists support services and programs are in place before the project goes into development, site selection will be an important component of the overall impact. RECOMMENDED NEXT STEPS If the Charleston region wants to move a mixed-use development forward, the next steps should include: 1. Conduct a Dual Arts Market Survey. The Charleston region needs to understand the depth of their creative market individual creative people as well as creative businesses. No matter what happens as a next step, having the data about the number of creative people needing space and what they can afford to pay is critical to understanding what should be supported in terms of physical space for the arts and creative sector. The fee for the Dual Survey is $42,500. The fee for the artist-only survey is $30,000. This fee includes the survey design, on-line hosting, weekly reports, data interpretation and a full data report as well as a marketing and communications tool-kit. 2. Advocacy for affordable tax credit housing. Influencing the Qualified Allocation Plan for the 9% LIHTC allocations should be a priority for the region. To do this work effectively, a coalition of regional stakeholders such as Metanoia and the Humanities Foundation would need to be gathered. 3. The above two steps will create a powerful picture of and vision for the demand and needs of the Charleston/North Charleston region s creative community. The report and advocacy will provide critical information to influence the development community nonprofit and forprofit for the creation and preservation of affordable space for the region s growing creative sector. 4. It should also be noted that the cities of Charleston and North Charleston could be influential in proposed development projects via a future Request for Proposal (RFP) process by requiring/encouraging developer(s) to include affordable live/work opportunities for the creative community. 7