Even in a Space for Cash-Strapped Arts Groups, the Rent Is Too Damn High

Alan Ziter’s been in San Diego long enough to see the process play out in neighborhoods across the city: Artists move into an affordable neighborhood, making it cool and eventually, unaffordable. He wanted to stop it in its tracks and find a place where San Diego’s arts community could put down solid roots.

That’s why he helped create Arts District Liberty Station – a cultural community within a collection of old homogenous city-owned military buildings in a high-priced coastal community – perhaps the last place an arts district would pop up on its own.

The arts district was envisioned as a place where artists could thrive without worrying about being pushed out. But a decade after its launch, arts tenants are finding themselves in the same spot the district was meant to insulate them from: Rents there are too high for many artists and cultural nonprofits to afford.

The Root of the Problem

When the Naval Training Center in Point Loma closed in 1997, Ziter and other arts leaders saw a huge opportunity.

“All the sudden these buildings were coming available,” he said. “And the one thing I knew was that all our arts groups and artists needed was space.”

City leaders held dozens of community meetings to gather input and figure out what to do with the 361-acre campus. They put together a land use plan and turned most of the property over to local developers The Corky McMillin Cos.

Arts leaders at the time made sure that 28 acres of the NTC campus and 26 of the old barracks buildings got set aside for arts and cultural use. City leaders agreed that building an arts district was a worthy cause, but stopped short of committing to subsidizing rent for future arts tenants or giving the project a steady stream of funding.

Instead, the city formed an independent nonprofit called the NTC Foundation and gave it full responsibility for renovation and operation of the spaces for at least 55 years.

The foundation started by renovating six buildings. Ziter, who’s been the executive director of the NTC Foundation since 2003, said the cost ended up being four times more than expected. And the usual philanthropic suspects weren’t very interested in helping out.

“They were more interested in supporting what was going on in the buildings than the renovation of the buildings,” said Ziter.

The foundation did get tax credits and some donations, but the majority of the funding was through conventional financing. That meant the foundation built up a lot of debt right out of the gate and, while the first round of tenants enjoyed cheap rent subsidized by the foundation, the nonprofit pretty quickly had to start passing off debt costs to tenants.

Other unexpected costs increased rents over the years. The NTC Foundation had to pay government-mandated prevailing wages when it rehabbed eight buildings in 2011, and it triggered unexpected property taxes when it formed a for-profit subsidiary to qualify for certain funding.

The great recession of 2008, which made it hard to rent out available spaces, and the loss of redevelopment dollars also added to the foundation’s debt. The NTC Foundation does get funding through the city’s Commission for Arts and Culture and the county’s community grant programs, but not enough to offset rents.

The Expressive Arts Institute was priced out of its location on Ray Street in North Park and was among the first wave of tenants at the Arts District Liberty Station.

Wes Chester, co-director of the nonprofit that trains arts therapists and runs public programming and a visual art gallery, said his group has seen a seen a 30 percent rent increase since 2013, plus increases in utilities and ballooning common area maintenance fees.

“The overall check per month has tripled in 10 years,” Chester said. “If you are going to make an arts community, it needs to be affordable – period. If your intention is to make a community of arts producers and creative synergy, you can’t do it at market rates. You will not find that community anywhere on the planet paying market rates.”

Malashock Dance is housed in the Dorothea Laub Dance Place facility. To save money, the company recently relocated its office downtown, but kept its studios and classrooms at Dance Place.

Molly Puryear, executive director of Malashock Dance, said being located in the arts district has allowed them to grow classes and has other benefits, but the high cost is a persistent problem.

“It’s interesting, because the square footage, if you break down the lease to price-per-square-foot, it isn’t very expensive, but you have to remember that on top of that you’re paying for the upkeep of this very expensive campus, so that burden is on tenants,” Puryear said.

Other arts tenants think the rent is a fair tradeoff for a prime location. Kelsey O’Brien, one of the owners of MK Envision Galleries, a relatively new tenant, said opening there was the “best business decision” she and her partner have made.

Ziter said the foundation does subsidize some arts groups’ rents – he said the foundation could get about $210,000 more annually if it charged market-rate rents.

But he knows rent there is higher than many of the city’s arts and culture nonprofits can afford. Yet since the city didn’t stipulate that the arts district needed to offer affordable or free space for artists and didn’t offer upfront funding to renovate the buildings, the NTC Foundation has a hefty debt service bill.

“And that inflates the rent we have to charge and precludes the groups that everyone wants to have here,” he said.

Ziter said the foundation board is now courting tenants with access to capital who can fund renovations in exchange for reduced rent.

The high-end theater and restaurant that opened last year, The Lot, is an example of that approach. Its owners paid to renovate the space.

The downside is that the strategy will likely shut out grassroots arts organizations, galleries or individual artists who can’t easily access the kind of money it takes to renovate historic buildings.

Linda Sheridan, a local arts leader who was involved with the initial formation of the arts district, said the lack of affordable space has plagued the project from the start.

“I commend the arts and culture venues that work diligently creating great work for our city at NTC,” she wrote in an email. “But I know a great many have had to leave because it was too expensive, and they couldn’t make it work.”

‘It Still Looks Like a Navy Base’

If you’re standing in the right place at the right time, Arts District Liberty Station can feel like it’s saturated with arts and culture – particularly during the monthly Friday Night Liberty events, when dance performances and fine art exhibitions are everywhere. Other times, it can feel completely devoid of culture, populated mostly with pricey restaurants and retail.

And sometimes, especially for those visiting NTC for the first time, the sea of unbranded beige buildings can make people feel totally lost and confused.

“At the tenant meetings, we always hear about just how difficult it is for people to find things,” said Puryear. “There are regulations against things like sandwich board signs, and that makes it hard, especially for the artists upstairs in the barracks buildings.”

Ziter said transforming a military campus into an arts district has indeed proven difficult.

“All these buildings in the historic district still have this very formal, monochromatic color, it still looks like a Navy base,” Ziter said. “The vibrancy of the arts and culture that is inside the buildings isn’t really reflective on the outside.”

When buildings are designated historic, all changes and upgrades have to follow strict guidelines, which has slowed the transformation. Every tweak must be approved by the city, the California Coastal Commission and the San Diego Airport Authority, since the campus is in the flight path.

Ziter said the foundation is actively working to improve the arts district’s way-finding problem. It just recently approved a new signage plan and some regulations have loosened up, so tenants will have more freedom to advertise their businesses.

The foundation is launching “Installations at the Station,” a new public art program that will hire San Diego and Southern California artists to create temporary, site-specific art installations.

And it’s applying for the new California Statewide Cultural Districts Program, which this year will designate a handful of official state cultural districts. The program doesn’t come with any funding, but it does include a freeway sign directing visitors to the sites and some additional clout and marketing opportunities.

The pilot program will start by naming just 15 sites statewide, and Ziter said he’s confident Arts District Liberty Station will be one of them.

“It’s a good story,” he said. “And it’s a model example of what can be done with the arts in old military space.”

Balancing Restaurants and Retail With Art

When the Expressive Art Institute moved to NTC, Chester said he was sold on a concept that the campus would be filled with working artists and not much else.

“That’s what we thought were moving into,” he said. “A really serious working artist community where, just like Ray Street in North Park, we could have collaborations and really work with our neighbors in projects of mutual interest.”

While there are certainly a good number of dance companies, art galleries and studios, museums and other cultural nonprofits, a limited number of government offices, certain types of retail that align with arts and culture and a few other tenants are also allowed.

In 2013, the city approved the NTC Foundation’s request to expand the allowed uses to include creative industries like architecture and graphic design offices.

“Thankfully we got some waivers because we were having challenges renting all this space,” Ziter said.

Chester said shifts like that have chipped away at the vision for a full-fledged arts district.

“It’s just not a lively arts community where people are producing art in community with each other,” he said. “It doesn’t feel like an artist colony – that’s the bottom line – it feels very much like a destination for people who are interested in viewing art, but the art here is still by majority not made onsite.”

One of the arguments for encouraging other uses is the synergy it creates. Arts District Liberty Station is pitched as a place for people to shop, dine, learn, create and buy local art.

Many tenants I spoke with said the mixed-use aspect of the campus has helped their business, and brought in diverse foot traffic. Several cited Liberty Public Market, and said it attracts customers who like to grab a bite to eat then explore the arts district.

But Puryear said the foot traffic to restaurants and retail doesn’t often translate into new arts and culture consumers.

“That traffic is spun as exposure, but it doesn’t necessarily lead to exposure to the arts venues,” she said. “It doesn’t result in bringing in a lot of new faces, at least for us.”

Ziter said he’s aware of the need to carefully balance the various uses. He said one thing that the community asked for decades ago was live/work spaces for artists.

The city and Coastal Commission said no, but Ziter said once The Corky McMillin Cos. completes its arts-themed $20 million hotel on the campus, the foundation will launch a program to house artists in short-term residencies there.

The NTC Foundation is also studying the possibility of opening a 300-seat performing arts venue. It’s a move that will make up for the loss of the Luce Auditorium – the building that was redeveloped into the high-end movie theater. That auditorium had long been imagined by some tenants as a performing arts venue that would help the arts district blossom.

Ziter hears lots of criticism from tenants and the community about what could or should be done with the various buildings. But he said it’s a tricky balancing act when you’re managing public land layered with land-use restrictions.

“I equate the development of the arts district to making sausage – the resident artists and dance and music groups and the public enjoy the savory success of the product but no one wants to see how it was made with these myriad of city, Coastal Commission, and airport documents influencing what we can and cannot have here,” he wrote in an email. “We have successfully worked within the limitations for the benefit of the community.”

Ziter said he thinks the foundation has been successful given the financial challenges of the project.

“I know there are some things that don’t fully meet the dreams and desires of all artists and arts organizations in the community,” he said. “But we wouldn’t be 97 percent occupied if people weren’t being successful here.”