Houston -- After sitting empty for 20 long years, an old hospital with a rich past has been redeveloped into affordable housing. The Elder Street Artist Lofts is the result of an ambitious four-year effort by Avenue Community Development Corp. (CDC), a nonprofit organization that serves Houston’s eclectic First Ward, a mixed-use neighborhood where warehouses are interspersed with housing.
“It’s right in the heart of our target area,” said Mary Lawler, executive director of Avenue CDC. “There’s a tremendous amount of history there. We wanted to preserve the building, but also convert it into something beneficial to the community.”
The $6.3 million project, which opened near the end of 2005, provides 34 loft-style apartments for artists and other residents. About 80% of the units are affordable, and 20% are market-rate, but even those are restricted to residents earning no more than 95% of the area median income. Rents range from about $270 for a one-bedroom apartment to $877 for a three-bedroom unit.
In addition to providing needed affordable housing, the project stands as a major achievement in preserving a landmark in a city where few historic buildings remain. The project, which was developed in partnership with Artspace Projects of Minneapolis, has received two awards in the short time that it has been open.
Elder Street was recognized by HGTV, the National Trust for Historic Preservation and Time Warner Cable as part of HGTV’s Restore America initiative. It also earned a Gold Brick Award from the Greater Houston Preservation Alliance.
The building dates back to 1924 when it was built as the original Jefferson Davis Hospital, the first city-owned hospital to accept indigent patients. One story goes that the hospital, which was built on top of a cemetery, was named after Davis, president of the Confederacy, to defuse the public outcry that occurred when people learned that the city was building on a site containing Confederate graves.
Upon its opening, the handsome brick building was considered one of the most stylish hospitals in the country.
The structure’s life as a hospital, however, was short lived. As Houston’s population grew, a new hospital was built around 1938 to replace the original one, which later served as a clinic, a drug treatment facility and a place for records storage. But, for the last two decades, it’s been vacant and neglected. Ghost stories even circulated. The landmark was vandalized and had become a magnet for people who just wanted to hang out.
Avenue CDC then stepped forward, purchasing the property from Harris County and coming up with a plan to redevelop the site. Although the group has a history of developing housing, it brought in Artspace Projects, a national nonprofit developer experienced at using historic tax credits and doing extensive, historic rehab projects.
Elder Street is Artspace’s first deal in Houston. The organization, however, was familiar with Texas, having worked on a project in Galveston, according to Wendy Holmes, vice president of Artspace, which specializes in creating and preserving affordable housing and space for artists across the country.
“It’s a beautiful building,” she said. Rehabbing it, however, was loaded with challenges.
The project’s colorful history made it interesting, but also more complicated. Because the hospital was built on a cemetery, an archaeologist was called in to avoid any further disruption of the grounds. Imaging technology was also used to ascertain the location of any graves.
The site, which had some underground storage tanks, also had to be cleaned to address possible environmental issues. The Environmental Protection Agency provided a $200,000 brownfields grant to help with the effort.
The development team assembled a mix of financing to make the project possible. Both low-income housing tax credits and historic tax credits were used, providing a combined $3.2 million in equity. Nationwide Insurance of Columbus, Ohio, was the tax credit investor.
Artspace’s projects regularly do more than just provide housing, said Rick Slagle, vice president at Apollo Housing Capital, the tax credit syndicator. The organization’s developments are catalysts for neighborhood revitalization, he said.
The group has historically renovated unused or underutilized buildings into fully functioning facilities. Artists not only live in the apartments, but work in them as well, so there is increased pedestrian traffic and interest in their neighborhood, resulting in a trendy, vibrant arts community.
On this project, the development team started with an outstanding building that showed promise even when it was in disrepair, Slagle said, noting that the neoclassical building had “architectural flair.”
It’s an iconic building in the city, according to Bill Neuhaus of W.O. Neuhaus Architects. Retaining the structure’s familiar front steps and entry was essential, he said. Inside, Neuhaus created 26 different floor plans for the 34 units. Terrazzo floors were preserved.
Without the right team of Avenue CDC and Artspace, the project never would have been realized, Neuhaus said. Those development partners opened up the lines of communication with all the different parties to make the deal happen.
In addition to obtaining critical tax credits, the team also secured the additional financing needed. Amegy Bank of Texas provided a $900,000 construction/permanent loan. The city of Houston provided a $500,000 tax increment reinvestment zone (TIRZ) loan, and Harris County added an $81,000 TIRZ grant. NeighborWorks America also provided $253,000 in grant financing.
In a sign of how important this project is to the community, various foundations stepped forward to provide $1 million. HGTV’s Restore America initiative contributed a $50,000 grant.
An artist’s dream
Avenue CDC has a longstanding relationship with the arts community, and the building was envisioned as artists’ live/work space.
Although the new apartments are not restricted to artists, many of the first to move in were musicians and painters.
The project allows many of these people to remain in the First Ward, where rising rents and home prices have been forcing low-income artists out.
About six of the apartments have become home to New Orleans jazz musicians and artists who were evacuees from the recent hurricanes. Houston’s population swelled last year as tens of thousands of people from the Gulf Coast took refuge in the city. The timing was such that leasing at Elder Street was happening around the time that the hurricanes hit.
Visual artist Lolet Boutté said she was one of the people on a New Orleans bridge waiting to be rescued after Hurricane Katrina. She’s found a new home at the Elder Street, where she shares a two-bedroom apartment with her daughter, a jazz singer.
“It’s the kind of place a visual artist dreams about even when you are down on your luck,” she said, describing the apartments as “beautiful.”
She said there’s good camaraderie among the residents. Her floor, she said, is like a dormitory, with people regularly sharing coffee and visiting. “Just about everyone knows everybody,” she said.
Project funding sources
Construction/permanent loan: Amegy Bank of Texas,$900,000
Tax credit equity: Apollo Housing Capital, $3.2 million
Tax Increment Reinvestment Zone (TIRZ) loan: City of Houston,$500,000
TIRZ grant: Harris County, $81,000
Permanently restricted grants:
NeighborWorks America, $253,000
Brownfields grant: Environmental Protection Agency, $200,000
Foundation grants: Various, $1 million
Restore America Grant: HGTV, $50,000