Artspace USA is a nonprofit developer of living/work space for artists and arts organizations that has completed 24 projects in 12 states since 1979. In early 2009, Artspace completed a marketing survey showing the availability of artists and sufficient interest in such a project in Billings. The study was paid for through a $35,000 appropriation from Downtown Tax Increment Financing (TIF) District funds, approved by the Council in 2008. The next step in the process is the payment of $750,000 to Artspace for predevelopment expenses, which include things such as design, financial proformas, tax credits, and other project financing applications. The Downtown Partnership is not in a position to fund the project until 2013 because of the relative newness of the Downtown TIF and the limits of its increment. The City has no funds available for the project at this time. Jack Nickels, Artspace Project Manager, has identified a National Endowment for the Arts (NEA) program that could provide up to $250,000 if the Council is willing to approve an application for a grant. The first step of the application is a Statement of Interest that is due March 15, 2010. Predevelopment fees are eligible for funding, although construct, purchase or renovation of facilities are not.

The NEA Mayors' Institute on City Design 25th Anniversary Initiative will award grants to projects such as the transformation of community sites into public spaces for cultural activities. Billings is eligible to apply for a grant because both former Mayors Tooley and Tussing attended the Mayors' Institute on City Design, which is a prerequisite for funding from the initiative. Shari Nault of Big Sky Economic Development Authority-Economic Development Corporation has prepared a Statement of Interest but, because this would be a new grant, Council approval is needed for its submission.

By April 8, 2010, NEA will invite selected organizations to submit grant applications no later than May 10, 2010. If a grant is awarded, work must begin between July 1 and December 31, 2010, and not exceed one year.

Because this would be an add-on item to the Council agenda, City Code requires that it be added to the agenda by a 3/4 vote of those present.

The Council may:

• Add the item to the March 8, 2010, agenda and authorize the Mayor to sign the Statement of Intent and, if successful, an application for a $250,000 NEA grant for Artspace predevelopment funds;
• Choose not to add the item to the March 8, 2010, agenda; or
• Add the item to the March 8, 2010, agenda and choose not to authorize the Mayor to sign the Statement of Intent.

If approved, the NEA grant would be for $250,000 of the $750,000 in predevelopment funds required by Artspace. The grants requires a 1-to-1 non-Federal match. The Downtown Billings Partnership asked Artspace to invest predevelopment funds with a promise of reimbursement at an 8-to-1 ratio if the project was completed, but the offer was declined by Artspace. Mr. Nickels says he would like the City to invest in the project, but would also seek other, private and public funding sources of revenue. The City has no identified source of funding for the project.

Staff recommends that the Council put the item on the March 8 agenda and authorize the Mayor to sign the NEA Statement of Interest and grant application if offered.