HomeMy WebLinkAboutAgenda 10-15-19 Item 6-b - Authorization to Proceed with Phase 1 of the Proposed Eno River Mill Arts Project and Associated Lease Agreement with Hedgehog Holdings 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 15, 2019
Action Agenda
Item No. 6-b
SUBJECT: Authorization to Proceed with Phase 1 of the Proposed Eno River Mill Arts
Project and Associated Lease Agreement with Hedgehog Holdings
DEPARTMENT: Orange County Arts
Commission
ATTACHMENT(S): INFORMATION CONTACT:
Eno River Arts Mill Project Outline Katie Murray, 919-245-2335
PURPOSE: To receive information on the proposed Eno River Mill Arts Project and approve the
Orange County Arts Commission and staff moving forward with Phase 1 of the Project by
authorizing the Manager to sign a lease agreement with Hedgehog Holdings for artist studio
space at the Eno River Mill in Hillsborough.
BACKGROUND: The Orange County Arts Commission (OCAC) has identified a lack of
infrastructure and equitable access as the two primary barriers for a healthy creative ecosystem
for Orange County artists and residents. By working in partnership with the Gold Family and its
partner, Hedgehog Holdings, the OCAC seeks to activate Hillsborough's historic Eno River Mill
through the arts, providing critically needed space for the creative community, as well as
generating economic impact for the surrounding area.
The mill, located in West Hillsborough along the Eno River, opened as a yarn mill in 1897 and
operated until 1984. It was bought by the Gold Family in 1988. Hedgehog Holdings became
managing partner in 2015. Currently, it houses Weaver Street Market's commissary, the
Expedition School, The Cloth Room Events Space and several small businesses. However, it
has vast amounts of raw, vacant space that would be perfect for the visual and performing arts.
The project is proposed to move forward in three phases, beginning with establishing thirteen
(13) move-in-ready artist studio spaces in Phase 1, and eventually providing space in Phases 2
and 3 for additional programs. Phase 1 and the overall project will increase arts access for
residents regardless of socio-economic status, while transforming the Mill into an arts
destination and economic asset for the Town of Hillsborough and the County. Approval to move
forward with Phase 1 and the lease agreement with Hedgehog Holdings will provide thirteen
(13) affordable artist studio spaces for local visual artists.
Pending Board approval, staff will develop a press release and pursue other opportunities to
publicize the project, and specifically the availability of the thirteen (13) artist studio spaces.
FINANCIAL IMPACT: This financial risk for Phase 1 is low. The goal will be to sub-lease all
thirteen (13) artist studio spaces to help cover the County's costs. However, the OCAC has
conservatively factored vacant spaces into the financial forecast. If three spaces remain vacant
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for the first year, the County cost would be $2,400, paid with Economic Development Article 46
funds. Throughout the course of the five-year lease, as spaces are filled, the project will
eventually generate a small profit which is proposed to be used to move forward to Phase 2 of
the plan. (The attached project outline provides for more information, including proposed plans
for Phases 2 and 3.)
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable
to this item:
• GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY
The creation and preservation of infrastructure, policies, programs and funding necessary
for residents to provide shelter, food, clothing and medical care for themselves and their
dependents.
• GOAL: ENABLE FULL CIVIC PARTICIPATION
Ensure that Orange County residents are able to engage government through voting and
volunteering by eliminating disparities in participation and barriers to participation.
ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal
impact associated with this item.
RECOMMENDATION(S): The Manager recommends that the Board:
1. Approve Phase 1 of the Project and authorize the County Manager to sign a lease
agreement with Hedgehog Holdings for up to five years consistent with the rent schedule
outlined in the attached project outline. This authorization is contingent on approval by
the County Attorney and commitments from ten or more artists to sublease the space
from Orange County;
2. Authorize the County Manager to sign sub-lease agreements with artists according to the
sub-lease rate schedule detailed in the attached project outline, pending review by the
County Attorney; and
3. Authorize staff to prepare a budget amendment to set up the program and account
structure in the Article 46 fund.
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ORANGE COUNTY ARTS COMMISSION
ENO RIVER ARTS MILL
SUMMARY
The Orange County Arts Commission (OCAC), in collaboration with The Gold Family and its partner, Hedgehog
Holdings, seeks to activate Hillsborough's historic Eno River Mill through the arts, providing a critical need for the
creative community of Orange County, as well as generating economic impact for the surrounding area. This
undertaking will take place in phases, beginning with move-in-ready studio spaces, and eventually providing
performing arts space, arts-retail space, and a variety of maker spaces.
BACKGROUND
In 2o16,the OCAC began a fact-finding mission to discover the challenges facing the creative community of Orange
County. Data was gathered through listening sessions, surveys, and meetings. The top three needs according to our
research were:
1. A strong Local Arts Agency. The OCAC,the Designated County Partner with the NC Arts Council, is working to
strengthen its role as the primary arts agency for Orange County. By supporting the artists and organizations
that provide arts experiences for the community, offering new programs/services, and working to increase arts
access for all residents,the OCAC will create a healthy,thriving arts ecosystem while increasing economic
impact though the arts.
2. Space.A lack of space for artists to thrive is the primary factor impacting the county's creative community.A
healthy arts ecosystem offers artists the opportunity to affordably live, as well as work, learn, and create. It also
offers residents the opportunity to experience the arts not only as observers, but participants. Market prices
have all but priced out artists and organizations from the downtown communities of Chapel Hill and Carrboro.
Downtown Hillsborough supports seven galleries; however, certain types of space are still needed.
• Studio Space:Affordable, long-term studio space is needed for artists to create work. Other than a few
exceptions,there are no available studio spaces in the county.As a result, artists rent space in other
counties or, if they have the necessary resources, work out of their home.
• Community Performance& Rehearsal Space: Hillsborough lacks a performing arts space to host mid-
sized acts. Local theater/performance groups also lack space to perform or rehearse, often using school
auditoriums, or non-traditional locations such as coffee shops.
• Class Space:The ArtsCenter in Carrboro and Chapel Hill's Community Clay Studio are the only spaces
for high quality visual arts learning in the county. Space is needed for artists and organizations to
conduct classes, afterschool programs, and camps.The size of the mill could also lend itself to facilities
such as a foundry or large-scale ceramics studio.
• Maker Space:There is currently not a community maker space in Orange County.A maker space could
offerthe public the chance to experiment with everything from 3D printers and sewing machines,to
kilns and metal-working equipment.
3. Access.The arts are a fundamental part of society, impacting student success rates, crime rates, and quality of
life.They are used in treatment for veterans,the critically ill, and trauma survivors. Despite the wealth of
human services offered in Orange County,the arts are primarily available to residents with the financial means
to pay.They should be integrated into all aspects of the community, but this is only possible with increased
space. Limited space means organizations are dependent on fees and tuition to protect their bottom line;
additional space could allow groups the flexibility to offer free/reduced tickets, scholarships, and other
programming geared towards underserved populations.
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HEDGEHOG HOLDINGS
Hedgehog Holdings is a family-run, historic preservation development firm based in Raleigh. For the last 40 years, its
focus has been the acquisition and adaptive reuse of properties listed on The National Register of Historic Places or
located within a National Register Historic District.Their score of properties vary from the 189os Farrens'Stable located
in Washington, D.C.'s Capitol Hill Historic District,to Pilot Mill, a historic Raleigh textile mill. In 2015,Alex Gold invited
Hedgehog to partner with the family in the redevelopment of the Eno River Mill("ERM"). Currently, ERM houses
Weaver Street Market's commissary,the Expedition School,The Cloth Room Events Space and several small
businesses. ERM Mill has vast amounts of raw,vacant space begging for revitalization.
In the spring, after a series of email conversations, OCAC Director Katie Murray and Board Chair Fred Joiner met with
Mark O'Neal and later with Hedgehog's founder Frank Gailor and Hedgehog's historic preservation specialist, Carrie
Ehrfurth.The initial meetings were to discuss a recently vacated office space that OCAC could use as artist studios.
What emerged from a series of follow up discussions was the vision of Eno River Mill as the County's hub for the arts.
The Hedgehog Team understands the potential of the arts to redefine the Eno Mill.They are willing to serve as an
active participant by offering below-market rental rates and the expertise that has come with years of experience in
historic preservation and upfitting.They are unique in that they are long-term, patient developers who invest in their
communities and often work with non-profit tenants. Among Hedgehog's past and present tenants are the
headquarters of the North Carolina Partnership for Children,The Washington DC office of US Public Interest Research
Group and Family Services of Wake County. The best evidence of the Hedgehogs tenant-centered focus is its
remarkably high retention rate. Of its existing tenants, more than 80%have been renewed or extended their lease
beyond the initial terms. The Company supports the arts with artist studios incorporated into their Glencoe Mill in
Burlington and Artisans Space at ERM.The opportunity to collaborate with and draw on the experience of a team like
Hedgehog, combined with the OCAC's know-how of the arts and arts space management,will be transformational for
the town and county.
PHASE 1 : ART MILL STUDIOS (SUITE 27)
Suite 27 is a move-in ready, 2,970 square foot,former office space. It would allow private and communal studio space
for up to 13 artists at affordable prices.The restored exposed brick hallwayjust outside of the space would allow for
exhibit space for tenants.
Potential Economic Impact:
• Money spent on studio space would stay local, rather than being spent in surrounding counties.
• Artists and visitors would provide new patrons for West Hillsborough businesses.
• Opening artist receptions would allow West Hillsborough expansion of Last Fridays Art Walk.
• The presence of artists and creative space will continue to grow the property value of ERM, and therefore tax
revenue for the county. Following restoration work at ERM, property tax grew from $26,80o in 2015 to$52,600
in 2018.
Implementation plan:
1. Following county approval,the OCAC would require one-year commitments from a minimum of ten artists. (In
the event that 13 artists are not confirmed, a large communal space will be used as classes instead of studios to
supplement income until three additional artists are found). The OCAC will use its artist database, arts partner
organizations, and social media base to notify artists of the available space.
2. Minor up-fitting (a commercial sink and private restroom)will be provided by Hedgehog following a
commitment from the OCAC.
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3. An artist-manager would be selected to monitor/supervise the space in exchange for reduced rent.
4. The budget forecast provided below is conservative. Excess revenue generated by the Studios would be used to
secure additional mill space(see Phase 2)
Five-year budget forecast:
Income(Assumes a 2.5%annual increase) Per month-Year 1 Notes YEAR 1 YEAR 2 YEAR 3 YEAR4 YEAR 5
Re nt Per person cost
Space $ 550.00 275(x2) $ 6,600.00 $ 6,765.00 $ 6,934.13 $ 7,107.48 $ 7,285.17
Space $ 550.00 275(x2) $ 6,600.00 $ 6,765.00 $ 6,934.13 $ 7,107.48 $ 7,285.17
Space $ 550.00 275(x2) $ 6,600.00 $ 6,765.00 $ 6,934.13 $ 7,107.48 $ 7,285.17
Space $ 275.00 275(xl) $ 3,300.00 $ 3,382.50 $ 3,467.06 $ 3,553.74 $ 3,642.58
Space E $ 275.00 275(x1) $ 3,300.00 $ 3,382.50 $ 3,467.06 $ 3,553.74 $ 3,642.58
Space F $ 600.00 300(x2) $ 7,200.00 $ 7,380.00 $ 7,564.50 $ 7,753.61 $ 7,947.45
Space G $ 600.00 200(x3) $ 7,200.00 $ 7,380.00 $ 7,564.50 $ 7,753.61 $ 7,947.45
Admin space $ (100.00) Less$100 rent for manager of space $ (1,200.00) $ (1,230.00) $ (1,260.75) $ (1,292.27) $ (1,324.58)
3 Vacant Studios $ (600.00) $ (7,200.00)
2 Vacant Studios ($550) $ (6,600.00)
1 Vacant Studio ($300) $ (3,600.00) $ (3,690.00) $ (3,782.25)
Total Rent $ 2,700.00 $ 32,400.00 $ 33,990.00 $ 38,004.75 $ 38,954.87 $ 39,928.74
Sales
Commission of sold work(30%of price) $ 120.00 $400 sales per month $ 1,440.00 $ 1,483.20 $ 1,527.70 $ 1,573.53 $ 1,620.73
Total Sales $ 120.00 $ 1,440.00 $ 1,483.20 $ 1,527.70 $ 1,573.53 $ 1,620.73
Total Income $ 2,820.00 i 00 i
Expense(Assumes 3%annual increase in expense)
Rent $ 2,700.00 With 5 year lease $ 32,400.00 $ 33,210.00 $ 34,040.25 $ 34,891.26 $ 35,763.54
Utilities $ 130.00 Based on past history $ 1,560.00 $ 1,606.80 $ 1,655.00 $ 1,704.65 $ 1,755.79
Insurance $ 40.00 $ 480.00 $ 494.40 $ 509.23 $ 524.51 $ 540.24
Other $ 150.00 $ 1,800.00 $ 1,854.00 $ 1,909.62 $ 1,966.91 $ 2,025.92
Total Expense 0.00 36,240.0040,085.49
NET $ (200.00) $ (2,400.00) $ (1,692.00) $ 1,418.34 1 $ 1,441.07 1 $ 1,463.98
PHASE 2: SUITE 29 OPEN SPACE
Suite 29 is a raw, open room that would be used for the following purposes: #
• Exhibit space:The majority of Hillsborough galleries are co-ops, meaning
only members are allowed to exhibit. Suite 29 would be open tojuried
artists desiring space to show their work. Exhibits would be managed and
juried by the OCAC, in exchange the OCAC would keep a 30%commission
on work sold.
• Class space:The OCAC would host two classes per month for the local
artist community, allowing revenue generation through class fees.The
space would be rented out by artists and organizations wishing to host
classes for the public; a 30%cut of fees will provide the OCAC revenue
while minimizing risk for the host(as opposed to an hourly fee).
• Event rental:The space could be rented for special events at a general rate
of$ioo/hour(more for for-profit businesses), providing an affordable venue for local organizations and
individuals to host parties, meetings, and other events.
Potential Economic Impact:
• Patrons of events and classes would patronize West Hillsborough businesses
• Money spent by class participants and organizations would stay local, rather than being spent in surrounding
counties.
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• The presence of artists and creative space will continue to grow the property value of ERM, and therefore tax
revenue for the county.
Implementation plan:
1. Revenue generated from the Mill Studios, outside grant support, and county support would provide seed
funding to cover Year i expenses, after which the space will become self-sustaining.
2. A part-time venue manager would be hired manage scheduling, events, and rentals.
Five-year budget forecast:
Income(Assumes a 3%annual increase) Per month-Year 1 Notes YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Rent
Large artist studio 1 $ 400.00 $ 4,800.00 $ 4,944.00 $ 5,092.32 $ 5,245.09 $ 5,402.44
Large artist studio 2 $ 400.00 $ 4,800.00 $ 4,944.00 $ 5,092.32 $ 5,245.09 $ 5,402.44
Total Rent $ 800.00 $ 9,600.00 $ 9,888.00 $ 10,184.64 $ 10,490.18 $ 10,804.88
Programming
OCAC Class space:100%of fees $ 800.00 2 class per mnth @$20/20 ppl $ 9,600.00 $ 9,888.00 $ 10,184.64 $ 10,490.18 $ 10,804.88
Rental Class space:30%of fees $ 360.00 1 class per wk @$30/10 ppl $ 4,320.00 $ 4,449.60 $ 4,583.09 $ 4,720.58 $ 4,862.20
Event Rental:$100/hr $ 800.00 2 events per month @$400 $ 9,600.00 $ 9,888.00 $ 10,184.64 $ 10,490.18 $ 10,804.88
Total Programming $ 1,960.00 $ 23,520.00 $ 24,225.60 $ 24,952.37 $ 25,700.94 $ 26,471.97
Sales
Commission of sold work:30%of price $ 300.00 $1k sales per month $ 3,600.00 $ 3,708.00 $ 3,819.24 $ 3,933.82 $ 4,051.83
Total sales $ 300.00 $ 3,600.00 $ 3,708.00 $ 3,819.24 $ 3,933.82 $ 4,051.83
Total Income $ 3,060.00 $ 36,720.00 $ 37,821.60
Expense(Assumes 3%annual increase in expense)
Rent $ 2,000.00 With 5 year lease $ 24,000.00 $ 24,600.00 $ 25,215.00 $ 25,845.38 $ 26,491.51
Utilities $ 130.00 Based on past history $ 1,560.00 $ 1,606.80 $ 1,655.00 $ 1,704.65 $ 1,755.79
Insurance $ 40.00 $ 480.00 $ 494.40 $ 509.23 $ 524.51 $ 540.24
Other $ 150.00 $ 1,800.00 $ 1,854.00 $ 1,909.62 $ 1,966.91 $ 2,025.92
Part-time venue manager(10 hrs/wk) $ 617.50 $ 7,410.00 $ 7,632.30 $ 7,861.27 $ 8,097.11 $ 8,340.02
Total Expense $ i $ 35,250.00 $ 36,187.50
NET $ 122.50 $ 1,470.001 $ 1,634.101 $ 1,806.121 $ 1,986.38 $ 2,175.20
PHASE 3: THE ARTS MILL
The Eno Mill holds at least three additional spaces ranging in size from 5,000- �� ■
7,000 square feet, making them ideal for a wide variety of uses, allowing the
OCAC to expand its offerings to the community while also generating revenue.
Potential uses for the space include:
• Mid-size performing arts space for live music and community theater. r
• Large rehearsal space, allowing the development of new community-
based performance programs, as well as space for existing groups.
• Membership-based maker space, including a possible woodworking
studio, ceramics studio,foundry, and/or metals lab.
• Art supply retail space.
• Expanded class space.
The activation of the rest of the mill will align with the creation of loft apartments by Hedgehog Holdings,which has
committed to offer some of the units to artists at a reduced rent.This unique opportunity for artists to live, create, and
sell work in the same space will transform the ERM into a destination for artists and arts patrons. In addition, it will
further brand Hillsborough as a hotbed for the arts within the Triangle.
To understand how best to utilize the remaining space,the OCAC will work with ArtSpace out of Minneapolis, MN, a
nonprofit developer of art spaces throughout the country. OCAC staff will work with ArtSpace to conduct a Sustainable
Facilities Analysis, including the development of multiple concept scenarios for the vacant spaces, a draft capital
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budget, and a draft operating budget with a fifteen-year forecast.The approximate cost for this service, including an
on-site visit, is sio,000.
Once a specific plan is in place,the OCAC,together with other community arts partners,will embark on a capital
campaign to cover upfitting, construction, and other costs. In addition to private support,the OCAC will explore
foundation, state and national grant funding.