Ex-artist colony sold to Little Rock property firm

LITTLE ROCK -- Little Rock Historic Properties will have another site under its belt.

The rental management company, owned by Jill Judy and her husband, Mark Brown, was the only one to bid for the Kramer School Lofts on Monday at the Pulaski County Circuit Courthouse. The couple own several properties in downtown Little Rock and offered $455,000 for the former school at 715 Sherman St.

The pending sale of the building will allow the tenants to stay for the foreseeable future. But whether the lofts return to the original concept as an artists' colony in the Quapaw Quarter neighborhood of historic homes just south of the River Market area is unknown.

The auction came after the operating owner of the lofts -- the Downtown Little Rock Redevelopment Corp., a subsidiary of the Downtown Little Rock Community Development Corp. -- had not made a payment on the $452,000 loan from the Arkansas Development Finance Authority, said Joe Fox, one of the corporation's board members.

The authority had issued the loan to the corporation in 2011 and included with it a moratorium on mortgage payments for three years, he said.

"Going into the fourth year, we did not request another moratorium," Fox said, adding the corporation allowed the authority to foreclose on the mortgage.

Little Rock Historic Properties will have to turn over the full bidding amount in cash to Dyke & Winzerling PLC within 24 hours, according to the auction rules. Once the company does that, the law firm will begin transferring the deed for the property.

Up for bids Monday was a 120-year-old building on Seventh and Sherman streets.

The building, constructed in 1895, was named after Frederick W. Kramer, the first president of the Little Rock School Board. Originally an elementary school, it received national spotlight as a center for early development and education, according to the school district's archives.

The school later closed in 1978 after the school district created a new center at the newly built Rockefeller Elementary.

The Kramer building was abandoned for many years until 1995 when private developer Vanadis 3 began to renovate the school into 22 low-to-moderate income loft-style apartments.

The project cost about $3.3 million, paid for with public and private funds including low-income housing tax credits, Paul Esterer, the president and chief executive officer of the developing company, has said.

The lofts opened in 1997 and were nationally lauded as a public housing experiment for artists with low incomes.

Erin Lorenzen, a tenant for several years, remembered when the lofts were booming with artists -- and shows.

Coming back to her hometown after two years in Argentina, she moved in with two of her friends -- photographer Dero Sanford and musician, painter and designer Vince Griffin -- sometime in the mid-2000s after some persuading from Sanford, she said. The roommates lived in one of two 3-bedroom apartments at the Kramer School Lofts. Those two apartments are now closed.

At the time, even artists who didn't live there would rotate through the building, she said. Bands would play shows in the basement, and the tenants could use the long hallways and auditorium space to showcase art, she said.

"It was honestly really fun," said Lorenzen, 36.

The building had its share of maintenance problems, though. Those who lived on the top floor complained of barrages of bats. The heating and air conditioning units were faulty.

About four years ago, Lorenzen said she was making a black leather dress for Angie Matika, the wife of Jeff Matika of the band Green Day, for the Grammys. It was the one and only dress she's made for the awards show.

Lorenzen was sewing together the dress when the bats came at her, she said.

"They would not leave me alone," she said, adding that since then, the problem has mostly dissipated.

In 2011, the building's ownership changed.

Two organizations picked up interest in the Kramer School Art Lofts Limited Partnership. The tax-credit syndicator National Equities Fund got 99 percent interest, while the Downtown Little Rock Redevelopment Corp. stepped in to hold the remaining 1 percent.

In essence, the redevelopment corporation is the general partner, which is the operating arm.

The redevelopment corporation kept the management company, First Capital Residential, Fox said.

"We stepped in to try to preserve the affordable housing and historical property," he said.

With the change, the building's owners took out a loan of more than $452,000 with a 1 percent interest rate from the finance authority. The loan was supposed to help pay off previous loans that became delinquent, including about $200,000 from Regions Bank and from the authority, officials have said.

Instead of foreclosing the property then, the authority decided to refinance it to maintain the low-cost housing. With the refinancing, the authority also set aside $50,000 for a reserve account for maintenance matters.

But about that same time, residents have said, there was less of an emphasis for the housing unit to be an artists' mecca -- and more on low-income housing for anyone.

"They [the management] just started saying no to everything," Lorenzen said. "And they put a huge insurance policy on the auditorium."

A federal lawsuit against several entities, including the development corporation and First Capital Residential, states that tenants who wanted to use the auditorium space had to secure a $1 million liability insurance policy.

That same year, many of the artists moved out, including Lorenzen's two roommates. She moved into a different apartment on the ground floor.

Now her art hangs in her bedroom. Above her front door is a handmade welcome sign with birds at the sides. She has a side table in the main room for a sewing machine. She's been making a lot of shirts and other clothes lately, but still does art. In the corner, she has a dressed mannequin. On one of her walls, she draped one of her larger fabric works with the words "everything is available."

On June 19, the development corporation sent out letters to the tenants, telling them about the auction. The development corporation's board of directors regretted that the building "proved to be unsustainable," the letter said.

"In order to properly maintain the property in excellent condition and address the physical items that are proving troublesome the funds required to do so have proved to be above the financial capability of the CDC," the letter states. "Therefore, the Downtown Little Rock Redevelopment Corporation has elected to turn the property back to the lienholder and relinquish control."

The letter sent some residents into a frenzy, unaware of what might happen next.

Lorenzen had said she started calling anyone who might know about the auction. She also started looking at other properties.

Lily Darragh, fellow resident and photographer, was also looking to move should new owners raise the rent, she said. Darragh had been on the waiting list for a loft there for two years. During that time, the photographer would have had to find studios or other places for photo shoots, she said. Two years ago, she finally scored a second-floor loft with 16-foot ceilings and enough space for her art.

On Tuesday, Lorenzen and Darragh -- who is the great-great-granddaughter of Frederick Kramer -- learned they had three years to stay in the housing unit.

During that three-year period, the owners cannot evict tenants except for good cause because the renovations were made using low-income housing tax credits, said Sara Oliver, vice president of housing for the finance authority. After the three years, the tenants can either stay -- with market rate rent-- or find affordable housing elsewhere, she said.

Currently, 20 of the 22 lofts are occupied.

Hearing that they could stay for the foreseeable future brought relief to Lorenzen and Darragh, who both attended the auction Monday.

"The plan is not to disturb or disrupt the current tenant base," said Judy, one of the new owners.

Once the sale goes through, Judy and Brown plan to fix up the building -- starting with a new roof, she said.

While relieved, Lorenzen is still hoping that the building will return to being an artists' colony.

"I think I'm most sad about how most of the artists have left. And they are so good," she said. "Without all of this [space], it's just a room with a lot of windows."

NW News on 06/30/2015

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