Hastings sells land for Artspace housing development

A new housing development that would offer housing and work space for up to 40 artists and their families is a step closer to reality in downtown Hastings.

The $12 to $13 million project, proposed by Minneapolis-based nonprofit Artspace Projects Inc., is planned for an acre of vacant land north of Second Street between Tyler Street and the railroad tracks.

The Hastings City Council voted June 15 to authorize the Hastings Economic Development and Redevelopment Authority to sign a purchase and development agreement with Artspace. The nonprofit real estate developer will pay a dollar for the one-acre parcel.

The project is the eastern bookend of the city's "Riverfront Renaissance" plan that stretches along the downtown area to just west of the Hwy. 61 bridge where a developer is planning to turn the H.D. Hudson Manufacturing building into apartments and commercial space. The overall project, which also includes a veteran's memorial and park improvements, aims to revitalize and strengthen the connection between downtown Hastings and the waterfront.

In addition to housing for artists, the Artspace development in Hastings will include street-level commercial and community space. Artspace has completed 38 such projects around the country.

The land where Artspace plans to build has been tax exempt since the city acquired it 20 years ago. The completed Artspace development would generate $50,000 to $70,000 a year in tax revenue, according to a memo to council members from John Hinzman, the city's community development director.

The dollar sale price is well below the land's assessed value of more than $316,000. But the low price will help Artspace deal with a projected gap in financing for the development, Heidi Kurtze, vice president of property development for the nonprofit, said in a letter to the city.

Artspace has applied for low-income housing tax credits through the Dakota County Community Development Agency and is seeking a mortgage from the county's Housing Opportunities Enhancement Program for some of the costs.

That financing would still fall about $2.6 million short of the expected development costs, Kurtze said. To fill the gap, Artspace may pursue financing from philanthropic sources or other federal, state or county resources, Kurtze wrote.

Because the financing includes low-income housing tax credits from Dakota County, residents must meet income requirements, said Wendy Holmes, senior vice president of consulting and strategic partnerships at Artspace.

To be eligible, an artist's income must be at or below 60 percent of the county's median income. Artists who meet the income requirement will then go through an interview with a group including Artspace representatives and established local artists.

"We're not judging them on quality," Holmes said. "We're judging them on commitment and passion and also interest and willingness in living in an artist community. So if somebody comes in with a painting that has wet paint, they're not likely to get in."

"You never assume you're going to get the credits until you get the credits, but it's far less competitive," Holmes said.

Construction of the Artspace project is to begin in June 2016 and take up to 12 months to complete. The Hastings project will be similar in design and scale to Artspace Jackson Flats, a 35-unit affordable rental housing project for artists and their families in Minneapolis.

Artspace was invited to assess the potential for such a project in Hastings by the Hastings Prescott Area Arts Council in June 2013. A survey released last November found a market for up to 37 new artist housing units in the city.

Hastings has used a similar "land for a dollar" approach in the city's industrial park, selling 17 properties for a dollar an acre since 1997, Hinzman reported to council members. That has resulted in $11.5 million in improvements and the creation of 130 jobs.