Financing Strategies

• INTRODUCTION AND OVERVIEW
• GET TO WORK
• FORMING A TEAM
• ON LOCATION
• FINANCE
• • ProForma/Financial Feasibility
  • Funding Resources
  • Financing Strategies

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Photo courtesy of Open Book.

Financial packages vary

As the funding world for Artist Space Development is highly localized, financial strategies differ from project to project. Although a few experienced developers, such as Artspace, have relatively fixed financial strategies (in the case of Artspace, the organization combines Low Income Housing Tax Credits and Historic Preservation Tax Credits in most of its projects), it is almost impossible to provide a universally applicable recipe for structuring financial packages of ASD.

Generally speaking, all affordable projects rely heavily on grants, subsidized loans and tax incentives from government and non-profit lenders such as CDFIs. Larger projects may benefit more from combining tax credits, while smaller projects may involve more private equity investment and sweat equity from artists.

Hire a financial advisor

Hiring a financial advisor is highly recommended from the very beginning of the project. Because structuring a strong financial package is essential for the success of any artist space development project, enlisting the help of a resource to help you navigate what can be a complicated process is highly encouraged.  Financial advice can be sought from:

Individuals or CDCs with experience in artist space development  Non-profiit developers with substantial experience in ASD may also be strong resources. For example, Artspace USA, a non-profit developer specializing in artist space, offers consulting services to share their considerable expertise with communities, artists, and potential developers. 

Specialized financial or real estate consulting firm

Community Development Financial Institution (CDFI)

CDFIs can offer consulting services based on their profound experience in community development projects as well as strong connections with both the public and private sectors.

Tax counsel/ attorney 

If the project involves combining multiple tax-credits or receives complicated tax incentives, tax counsel is recommended. You can find a tax attorney by seeking help from your local bar association or free law services targeted at artists.

Work closely with local players

These resources can help you keep track of local development trends and access information of local funding opportunities. Additionally, they may help garner support for the space project from the community in which it would be located, which is essential when competing for various tax credits, government grants, subsidized loans, and the like. Potential local players include:

State Agencies
The Department of Housing and Community Development
Housing Finance Authority

Municipal Agencies
Urban Renewal/Redevelopment Authority
Office or Department of Economic Development
Department of Neighborhood Development
Department of City Commerce

Community Development Corporation (CDC)

Collaboration between artists and local CDCs is common in artist space development because CDCs usually have extensive connection with the local community, lenders, and officials, which can help generate support for ASD. To find a local resource try locating a state association of CDCs such as:

Massachusetts Association of Community Development Corporations
North Carolina Association of Community Development Corporations
South Carolina Association of Community Development Corporations
Ohio CDC association

Community Development Financial Institution

As so many financial institutions resist financing artist space projects, especially in the predevelopment stage, due to the perceived high risk, CDFIs have been  essential funding sources for Artist Space Development. For example, Local Initiative Support Corporation (LISC) has financed various artist live/work projects across the country. You can find your local LISC office by clicking here. 

Besides direct financing, CDFIs also provide various consulting services to help structure financial packages. Their extensive local connections enable CDFIs to help you seek further funding opportunities for an artist space project. For a list of certified CDFI state by state click here

State and local art councils/organizations

For artists, working with art councils or organizations may open up potential funding resources.  For developers, working with local art organizations may help identify potential markets for the project.  This is very important in securing funding from lenders and various funding programs. To locate your state's art council click here.

Additionally, this comprehensive list of local players and funding resources based in MA might help you find their counterparts in your own state.

Further Reading

Developing Affordable Space for Artists:  A Summary of LISC Funded Projects. December 2004.  Community Partners Consultants, Inc.  Date of Access:  Oct 30, 2009.  http://www.artistlink.org/files/Developing%20Affordable%20Space%20for%20Artists.pdf

Kartes, Cheryl.  Creating Space: A Guide to Real Estate Development for Artists: Chapter 6.  New York: American Council for the Arts, 1993.

Walker, Chris.  Artist Space Development: Financing.  Washington D.C.: Urban Institute, 2007.

Sources

Developing Affordable Space for Artists:  A Summary of LISC Funded Projects. December 2004.  Community Partners Consultants, Inc.  Date of Access:  Oct 30, 2009.  http://www.artistlink.org/files/Developing%20Affordable%20Space%20for%20Artists.pdf

Kartes, Cheryl.  Creating Space: A Guide to Real Estate Development for Artists.  New York: American Council for the Arts, 1993.

Walker, Chris.  Artist Space Development: Financing.  Washington D.C.: Urban Institute, 2007.