Artspace gets approval for tax credits

By BOB OLIVER
Times-Herald Newspapers

DEARBORN — Artspace is a couple of signatures away from being granted an award of low income tax credits from the Michigan State Housing Development Authority.

The group was notified that it was being conditionally awarded the credits last month but was informed that it still had to submit additional items to complete its paperwork.

The items were submitted before the Nov. 22 deadline given by MSHDA and on Dec. 5 Artspace received word that its paperwork was accepted and that the group just needed to sign and notarize a “Binding Agreement for Future Year’s Credit Authority” and sign a “Gross Rent Floor Election” by Dec. 19 to finalize the process.

Property Development Project Manager Becky Carlson St. Clair said the required documents were submitted to MSHDA offices on Dec. 11, and that Artspace is currently working with the city to develop a timetable of when the City Hall complex will become available for renovations to begin.

Renovations are expected to take 12 to 15 months and are expected to begin in June.

The new city hall will be in the Dearborn Administration Center, 16901 Michigan Ave., a building the city purchased last year for $3.2 million.

It is estimated that moving the city’s operations to this new facility will save the city $400,000 annually.

Artspace, a Minneapolis-based nonprofit real estate developer, purchased the City Hall complex in July and plans to renovate it to create 46 work and living spaces for artists as well as spaces for art studios, art organizations and creative businesses.

Artspace has many similar properties throughout the country, but this would be its first in Michigan.

Artspace will be awarded credits up to $792,101 annually for 10 years, which it can sell for equity that will be used to pay for the construction costs of the project, which is roughly $15.7 million, though only $10.5 million of that total cost is eligible to be done with tax credit money.

Over the 10 years that Artspace will receive credits from the award, it will sell them for approximately $7.4 million in equity.

St. Clair said securing tax credits is the largest hurdle Artspace faces when beginning a new project and that it has always completed a project after being approved for the credits.

The tax credit money could only be used for items attributable to the construction as approved by MSHDA, such as converting the rooms into apartments. Other repairs needed at the complex would have to be paid for by Artspace or through donations from outside sponsors.

One such source of income will be historic tax credits, which are expected to provide $2.4 million to Artspace. The City Hall complex, built in 1922, was designated a historic site by the state last month.

St. Clair said that Artspace is now focusing on securing funds for the commercial components of the project.

(Bob Oliver can be reached at boliver@bewickpublications.com.)

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