Crane Arts

September 2008—The United Methodist Church considers adequate housing a basic human right and has called upon members of the Church to “improve[e] existing laws, develop…more imaginative approaches where possible, and provid[e] adequate funding for housing designated to meet the needs of the ill-sheltered.”

Accordingly, the General Board of Pension and Health Benefits (General Board) has been making affordable housing loans since the early 1990s. Most of these loans have been for projects receiving Low Income Housing Tax Credits (LIHTCs). The LIHTC program allows owners of affordable housing to receive a credit against their federal income taxes.

Individuals living in low-income communities need more than just affordable housing, though. They also need jobs, training, education, child care, grocery stores, shopping centers and access to affordable health care facilities. With the creation of the New Markets Tax Credits (NMTC) program, an outgrowth of the Community Tax Relief Act of 2000, investors are being encouraged to invest in nonhousing projects, such as businesses and other commercial enterprises, in low-income communities throughout the U.S.

Since the creation of the NMTC program, developers across the nation have begun to build in disadvantaged neighborhoods. However, private investment in qualifying NMTC projects is often insufficient. As a result, investors such as the General Board have an opportunity to ensure that projects are completed successfully by providing additional market-rate debt financing.

In 2008, the General Board funded a loan made to the Crane Arts facility (www.cranearts.com). This loan was initiated by The Reinvestment Fund (TRF) (www.trfund.com), a General Board intermediary partner headquartered in Philadelphia. It will be used to complete the renovation of a Philadelphia warehouse and horse stable, built in 1905, and originally used to manufacture bath fixtures. The project will transform two industrial buildings into workspaces for artists and small businesses and additional open spaces for artists’ galleries and social events.

The Crane Arts site is located in the American Street Industrial Park section of Philadelphia, an old manufacturing area where most buildings are more than 100 years old. The neighborhood is experiencing revitalization, and over the past few years, vacant and boarded-up structures have been demolished and replaced with new commercial developments.

Because this old industrial sector of Philadelphia area has not yet been targeted by developers and investors, property values remain low enough to provide affordable rental workspaces for artists. Creating an artists’ center also provides for other cost-saving opportunities, such as the sharing of equipment.

Through its research, TRF found a strong correlation between community investment in cultural assets and a reduction in poverty. The arts can be enjoyed by individuals of all socioeconomic levels and provides a platform for vital community interactions and connections. An arts and cultural center also attracts new residents, consumers, entrepreneurs and businesses.

The Crane Arts facility is one of many projects the General Board has helped fund in an effort to foster commercial and social development in low-income communities. After the General Board funded the loan to Crane Arts, all 39 initial workspace units were fully leased, and there is currently a waiting list. The loan will allow the developer to complete renovations to the second building and create more studio space. The project has already begun to bring the local community together through weekend art classes, gallery nights and year-round exhibits that draw in many visitors.

Crane Arts is an excellent example of how the General Board uses its financial resources to achieve the Church’s important social goals. With more than $1 billion committed to its Positive Social Purpose Investment Program, the General Board is a major investor in affordable housing, community development projects, charter schools and microfinance lending opportunities throughout the U.S. and abroad.