Art Center Consolidates, Sells Felch Property

When Rob Cleveland of ICON Technologies sent us a press release about his firm’s purchase of the Ann Arbor Art Center’s Felch Street property, we took the opportunity to get an update on the center’s plans for its main Liberty Street site.

We reported last year that the art center, like virtually all nonprofits, was struggling financially and faced a budget shortfall. Last August, with two weeks left in their fiscal year, they’d launched a “Close the Books in the Black Campaign” to raise $20,000. So how was the center faring financially now?

The sale of the Felch property – also known as the Art Factory – helps their financial outlook, said Marsha Chamberlin, the center’s CEO. (She spoke to us by phone from New York City, where she’s visiting her daughter this week.) Proceeds will be used to pay down debt and “put a little in the bank,” she said. Terms of the deal were not disclosed, but Chamberlin said they got “a very good price.” When the building went on the market in September, it was listed for $1.1 million.

ICON Technologies, an Ann Arbor-based online marketing agency with offices on South State Street, made an offer within a week of the listing. Environmental studies, working through requirements for an SBA loan and dealing with the due diligence of its lenders – especially in the wake of last fall’s nationwide financial meltdown – pushed back the closing. The final papers were signed on Feb. 20 just before 6 p.m., Chamberlin said.

The building sale was part of a three-year plan to bring all of the center’s activities under one roof, and is unrelated to the center’s involvement in a proposal to redevelop the city-owned 415 W. Washington site. More on that later.

The center owns the downtown Ann Arbor building at 117 W. Liberty, which houses its offices, retail shop and galleries, as well as its drawing and painting studios. They’d bought the Felch Street building in the mid-1990s because they’d been renting studio space elsewhere and figured “if we’re going to put money into it, let’s at least own it,” Chamberlin said.

Over the years, their space needs changed. At 11,000 square feet, the Felch building was too large for the center’s needs, and they’d been renting out extra square footage to other tenants. In the past they’d also rented space at the Liberty Street location, though there aren’t any tenants there now. That gives them room to bring the ceramic and jewelry studios now at the Art Factory back to the main downtown site, Chamberlin said. The center’s staff is working with Rizzolo Brown & Novak Architects to do space planning and remodeling – they plan to vacate Felch by June 1.

The economy is affecting the Ann Arbor Art Center just as it’s affecting other arts and cultural groups, Chamberlin said. Membership is down 25% over the past two years. They now have about about 1,000 members – at their high point five years ago, that number was close to 2,700.

In other cases, there are some mixed signs. December sales for the gift shop were down, but this January sales exceeded the previous year. Fall registration for art center classes exceeded their expectations by 20%, she said, but dropped for the winter term. Community giving is down, but they’re about to announce the sponsorship of the center’s 100th anniversary this year with a “generous donation,” Chamberlin said.

Even so, at the end of December Chamberlin had to retool the budget based on a less optimistic forecast. They’ve been meeting those new numbers, she said, but “by the skin of our teeth.”

Despite those challenges, she described the sale of Felch and consolidation into 117 W. Liberty as a strategic reorganization, not a retrenchment. The changes will make the art center more of a hub for all their activities. “Everything we do will be a lot more visible,” she said.

As for the status of the 415 W. Washington project, “we wish we knew,” she said. The art center is the lead partner in a proposal to redevelop that site, and was one of three finalists selected by an advisory committee to city council. However, as previously reported in The Chronicle, the committee did not make a single recommendation, saying they liked elements from all three final proposals and asking the city to “refine” its RFP (request for proposal) and have the three finalists reapply under the new RFP. To date, the refined RFP has not yet been released, so the art center and others vying for this project are on hold.

Though they’ve worked on this project for more than three years, it’s just as well that there’s been a delay, said Chamberlin, because the Felch sale and the response to the economic climate have occupied the art center’s focus.