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A Guide for Creating and Preserving Affordable Artist Spaces

Design & Construction

Initial Budgets & Designs

An initial plan and cost estimate for yuor project does not have to be elaborate or costly. Do not reinvent the wheel. Even at this early stage we recommend the use of an architect AND a code consultant. This is because the building code is a complicated legal document that allows for many interpretations. It is the job of the code consultant to find the least costly code interpretation for your project, while still providing a safe building.

The architect provides a two-dimensional plan at this stage, to scale but quite simple, called a "pre-schematic" plan. The architect also should provide an outline specification which lists the types of materials, finishes, systems, and equipment required. Rough building measurements are done, but this is not the time to spend money to fully measure the building.

A contractor or professional estimator can use the code report, pre-schematic plans, outline specification, and a set of building photos to arrive at a rough budget price. Always test your estimates by comparing it to recent similar projects. If everyone else is spending about $100,000 per unit on construction costs to fully renovate a loft building, your $50,000 estimate will look suspect.

The next step is to prepare a "pro forma" for the project. This is a more detailed financial analysis of the project and will give you a better idea of whether the asking price is realistic given construction costs and selling or rental price. Be felxible - this analysis will change and morph as different costs and inputs occur during the process of development. It is imperative that someone on your team understands how this works.

EARLY EXPENDITURES
Expenses up front should always be minimized until the property is taken off the market with a Letter-of-Intent to Purchase. A deposit to the seller is typically required to tie up the property, but it should be refundable (for any reason at all) for a period of a month or two. As the project progresses, purchase deposits become "hard," or non-refundable. While most Purchase and Sale agreements have contingencies which give back your deposit for things beyond your control (inability to obtain zoning approval, environmental problems, hidden structural problems, etc.), it is unusual to get a refund because you did not correctly price your units or under-estimated your construction costs.

So, unless you want to gamble with your purchase deposit, you need to spend what it takes to get comfortable with your pro forma before your deposit becomes non-refundable. While the contractor may not charge for his estimating time, the architect will charge for his drawings and outline spec, your lawyer will charge to negotiate the Purchase and Sale agreement, the code consultant will charge for his analysis, and engineers will charge to opine on the structure and the environmental issues. Including the purchase deposit, this adds up to a significant amount of money, typically between 10 and 15 percent of the total project cost.

In most cases with artists projects, the developer or group of artists has to put up the money to cover these pre-development costs. If you are one of those putting in money up front, you should have a formal agreement stating how your funds will be used, and how they will be credited towards your share of the project.

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Building Codes

As building and life-safety codes have evolved over the years, older buildings, built to antiquated standards, often do not comply with building codes for new construction. Since older buildings, particularly industrial buildings, possess qualities attractive to artists such as abundant windows, high ceilings, muscular structures, and natural light, the rehabilitation of older buildings is often preferable to new construction. Fortunately, Chapter 34 of the Massachusetts Building Code allows latitude for renovations of existing buildings. Also, continuation of an existing use (typically workspace) is treated more leniently than change to a new use. Addition of sprinkler systems can reduce some dimensional and fire protection requirements. Some requirements only come into effect above certain gross building areas, or when rehab costs exceed a certain percentage of the property's value.

The best way to understand the code as it applies to your project is to hire a code consultant. Knowing the code is an art form in itself and your architect will not typically understand the whole picture. Having a code consultant on your team will simplify your process of development and help immensely.

The entire building needs to be investigated as a package – not in a piecemeal fashion. Because the code is complex, and building inspectors are not trained as lawyers, your code consultant can explain your code interpretation to plan reviewers, building inspectors, fire inspectors, engineers, etc.

When questions arise during construction about things like ducts passing through walls, or sprinklers in closets, or existing stairs that are just a little steeper than the current code allows, or exposed steel components, etc., the consultant is there to interpret the regulations on your behalf.

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Working with Architects

Tips on design: The design of the project stays with it as long as it lasts. It outlives lenders, occupants, buyers, sellers, and the rest of the crew. A well-designed project can save money and increase efficiency. Moreover, a well-designed project demonstrates your creativity and your intelligence to the world.

Tips on engineers: A typical project requires structural, civil (site work), and Mechanical, Electrical, Plumbing and Fire Protection (MEPFP) engineers. Good engineering is at the core of an artist building and the reason we admire industrial structures. It is the key to systems that work well and efficiently. Some of the engineers are almost always sub-contractors to the architect (structural, for instance) and others often work directly for the developer (civil, for instance).

Design-build: In the relatively simple world of art space renovations, the MEPFP engineering is sometimes done as "design-build" (a method to deliver a project where the design and construction services are contracted by a single entity known as the design–builder or design–build contractor). The architect, developer, and contractor map out a strategic outline specification for the building systems, and the contractor bids that outline spec to competing sub-contractors who include the final engineering drawings as part of their construction work. The developer employs his own MEPFP engineer to write the outline spec and to review the submittals prepared by the subcontractors. When well-supervised, this system can save design fees, uncover efficiencies, and greatly reduce change orders.

STAGES OF THE DESIGN PROCESS:

Pre-schematics: Layout drawings done to test the general fit of spaces in a site or building. Often several schemes are still in competitive play.

Schematics: Plans and elevations of all major and most minor spaces, showing the design concept to scale. An outline specification is included. Typically the team has made enough decisions to have settled on one scheme.

Design-development: This is an ill-defined stage, somewhere between schematics and Construction Documents. Generally it is the point at which the client can be billed for introducing major design changes, and at which the contractor or estimator is asked to commit to an estimated price. Dimensions, materials, and unusual details are supposed to be indicated.

Construction documents: Drawings and specifications which legally bind the owner, the architect, and the developer to the job. They are stamped by the architect and/or engineers and submitted to the building department. They are formally bound into the construction contract. Changes subsequent to their issuance become the basis for those unpleasant missives from the contractor known as "change-orders".

Construction period services: The architect inspects the work and signs-off on a monthly requisition which releases (or denies) the contractor's monthly payment request. The architect's role is legally defined at this stage and is key to the funding process.

The architect's contract typically breaks down according to these stages of service listed above. Fees vary widely. Low overhead keeps fees down, but short-staffing can lead to costly delays and oversights.

Very good results have come from architects who are within the artists' team, but beware un-staffed "moon-lighters," no matter how well-intentioned. Unless the project is really small, this should be the architect's full-time, primary focus.

Certificates and Insurance: Make sure that your architect is prepared to sign the "Architect's Certificate" issued by the construction lender. This certificate is basically a guarantee that the plans and specs meet all applicable codes, and puts the architect in the line-of-fire should errors be uncovered. No architect should sign it without carrying professional liability insurance.

Remember, an architect is only as good as his client. Think your needs over carefully and respond to questions promptly. You are a big part of the effort to keep fees down and schedules intact.

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Contractors and Construction

Finding suitable contractors and negotiating the construction contract is a critical step in the development process. Be sure to have an experienced real estate lawyer, project manager and architect with you during this process to understand how to set up this negotiation. When selecting a contractor to undertake your project, check references comprehensively. Do they stick to their price and timetable? Are there change orders? The lowest bidder may not always be competent or reliable. Be sure to do some networking and find some recommended contractors before settling in on the first one you meet

TYPES OF OWNER/CONTRACTOR RELATIONSHIPS
Contracts are either competitively bid, or they are negotiated. Neither system is perfect. Many developers choose a general contractor early, and have competitive bidding only at the level of sub-contracts. This gives a constant update on the estimated cost, and makes the contractor a part of the team. It also provides a price before the drawings are permanently fixed and helps to ensure that the final plans will be within the budget.

Having an owner's rep: While your architect will monitor construction, someone on your team should serve as the owner's representative during the construction phase. This is a person who can make on-the-spot decisions when problems arise. The owner's rep is essentially a project manager, and will coordinate between the architect, building inspectors and the artists who will be using the space. The development group should fully support this person during the stressful time of construction.

Work by occupants: You need to make a clear-cut distinction between the work of the Contractor, and any work done by unit occupants themselves. Generally speaking, it is almost impossible to have amateurs working on the job before the Certificate of Occupancy has been issued. Even once the project is turned over, amateur builders need guidance so that their work meets the code and other building standards.

Working with building inspectors: After determining that the completed work is acceptable, the local building inspector will issue a Certificate of Occupancy (C of O). This permit can be issued for the entire building or on a unit-by-unit basis as spaces are completed and inspected. Obviously, the inspectors are not eager to come to the property endlessly, so they sometimes will refuse to issue C of O for individual units.

Building inspectors can change (and multiply) during the course of construction, and new ones may not understand the code interpretations which have already been approved. It's important to be organized and prepared when meeting with inspectors. It is also important to appoint a single point person (often the code consultant) to answer questions and respond to requests from the building, electrical, elevator and fire inspectors.

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