In Seattle, an artist workspace complex created a unique ownership structure to reflect the benefits that flow from its creative community.
‘Esmeralda… are… you… ready?!?!’
The seven-year-old girl with the eight-pound sledgehammer nervously blurts out ‘Yes!’
Hammering Man, Letter Lady and Safety Guy are all ‘Ready!’
The lunatic emcee pulls the bright red glowing steel icon out of the forge and thrusts it up into the night sky yelling ‘Hot Metal!’ as everyone’s eyes widen, and the chorus of the crowd rises up excitedly in return: ‘Hot Metal!!’ He drops the icon onto the anvil as Letter Lady slams the stamps into position, Safety Guy gives the affirmative ‘Clear!’ and Hammering Man gives Esmeralda the signal…
The emboldened girl awkwardly sends the hammer careening into the target and The Mighty Schmackammer roars to life dropping 700 pounds to punch ‘EF’ deep into the steel in a blaze of smoke and fire. The crowd goes wild! The team frees the icon and plunges it into water with a loud hiss and a cloud of steam before handing it to the girl.
Esmeralda is alight with wonder as she feels the depth of her initials in the steel and intently decides where it will be welded into this huge community sculpture, called The Gardens of Gusto, that she has just helped create.
Photo credit: Equinox Studios
As with giant, air-cleansing, living sculpture creation, investing in arts and culture is not only inspiring and wonderous, but also has a lasting impact on the creators, the collaborators and the whole community.
Equinox Studios is a complex of four light industrial buildings, with over 100,000 square feet of workspace where on any given day 200 or so artists and artisans are painting, sculpting, photographing, metalworking and blacksmithing, woodworking, stone carving, making glass, ceramics, movies and music, dancing in two 99-seat performance spaces and studying in two painting schools. Imagine it, and someone is probably doing it here.
As they become part of the community, volunteer to co-create experiences, and thrive in collaboration, cross-pollination, co-inspiration and co-perspiration, tenants spread the word and get other people excited
We founded Equinox to create, foster and sustain affordable facilities for artists and to engage the greater community in the inspiration and exploration of art. We do that by collectively acquiring and developing workspace, and creating zany, madcap art-making adventures for kids of all ages to experience the work being done here. We take art out on the town to inspire people and lure them back to our creative lair, for both social and economic return.
This collaboration to engage the community and each other in the production and enjoyment of art led to the creation of our tenant ownership model, whereby each and every tenant becomes an owner of the complex.
Photo credit: Equinox Studios
Seven years ago, when we had the opportunity to expand from two buildings to four, and we were able to capture the equity we had created to make it happen, we took a hard look at how we had gotten to that point. The original building had not only gained value through market appreciation and from renovations we had done over the years, but we were clearly benefiting from the spiritulogical investment of all the tenants. As they become part of the community, volunteer to co-create experiences, and thrive in collaboration, cross-pollination, co-inspiration and co-perspiration, tenants spread the word and get other people excited. Those people come with their friends, colleagues and clients to events, or to shop, or to get on the waiting list to lease a studio – which translates to the economic benefit of no vacancies and no paid advertising to recruit tenants. All this raises the financial value of the property.
Once we really understood this, we had to find the way to recognise the tenant contribution. We needed to capture the financial return of each tenant’s spiritulogical investment. We looked around the world for a model, but came up short, so we built one from scratch. Now, each tenant, just by paying their rent and being an active part of the community, gets ownership in the social purpose corporation that owns 33% of the complex. Tenants do not bring any cash to the table, they simply do their work in the space.
They get one share of stock relative to every dollar they pay in rent and are eligible for annual and long-term dividends. We project a 6-8% return for the company annually, and the tenants as a whole decide what to do with the social purpose corporation’s share. Every tenant can put an idea forward. Ideas are vetted for viability and then selected by majority vote. We can pay out to the shareholders, do streetscape improvements or start a programme for at-risk youth to see art as a possible future. Whatever tenants come up with and vote for, that’s what we do.
Photo credit: Equinox Studios
Long-term dividends are possible when we have paid down enough debt and gained significant appreciation. We are modelling that about every 10 years, in line with our mortgage terms. As a community, we could decide to pull money out and pay dividends, projected to be a 10% return relative to everything tenants have paid in rent over the years. We could also decide to pay that forward and buy another building to provide more affordable space for more artists and artisans to benefit, expanding our reach and influence into the greater community.
We have financed this adventure with incredible social impact lenders like RSF Social Finance and Craft 3, who have been able to celebrate our mission and, at the same time, see that our financial performance is sufficient to service a loan and generate a substantial return for them and us.
Through our tenant ownership, and in partnership with those impact investors, we have been able to grow from a handful of tenants to over 130, and from a handshake and a prayer to over US$16 million in value.
This is inspiring and wondrous fiscally. And it is also important to our community. Seven years later, Esmerelda is designing affordable artist housing over a co-op grocery store to serve the residents and neighbours, and the Equinox Tenant Owners just voted unanimously to pay our equity forward to create an entire village of affordable housing and community-serving retail and workspace in the neighbourhood.
Because we all do better when we all do better. Hot Metal!
