"Art centers...have benefited from an array of more generous approaches by municipalities…For example, the New Arts Center in Newton was given their building in perpetuity by the town of Newton in return for their commitment to occupy and renovate what had been an abandoned building.  In towns such as Northbridge, Holyoke and Lowell, MCC staff report that the towns are actively collaborating with nonprofit arts groups to provide facilities that will house the organizations.  These examples do demonstrate the approach taken by towns intent on sustaining arts organizations within their communities"--Smith & St. John/TDC Benchmarking Study

The Dream of a Lease

Munroe an "At-Will" Tenant

Munroe Center for the Arts has operated without a lease since it won its bid for a town RFP (request for a proposal) in 1994. Although Munroe offered a lease draft, it was never signed by the town.

"The original conditions of the current ‘at will' lease arrangement grants the MC use of the facility without rent, provided however that it...serves the community's arts education needs and that responsibility for maintenance of the Munroe rests with the MCA"--Town Manager Rick White (See Lexington and Stewardship).

In 2002-2003, the Town of Lexington and Munroe seemed to have achieved agreement on a formal lease. A draft lease proposed by Munroe stipulated a rent of $1,500/year and a ten-year term with two five-year extensions, and defined maintenance and repair obligations. Selectmen seemed to give preliminary approval, but in May 2003, an town amendment stipulated building liability insurance premiums costing $18,000/year that Munroe determined it could not afford.

The Town of Lexington presented a new lease proposal in the fall of 2006, with considerably different terms. On the table is a "license" with the term of one year, a rent of $39,000 retroactive to fall 2006, and detailed responsibilities for Munroe, including capital repairs. There are no capital or maintenance duties assigned to the Town. Negotiations continue....

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Munroe commissioned a study from Smith & St. John & TDC, completed last spring, to survey the typical relations between community arts centers inhabiting town buildings and their towns. Following are selections from that study regarding lease issues.

What Would a Fair Lease Look Like?
2007 Benchmarking Study

In December 2006, the Munroe Center for the Arts (MCA) embarked on a research project to better understand the different options it could pursue in creating a more formal arrangement with the town of Lexington regarding the use of the Munroe School Building,

In December of 2006, TDC compiled a list of five arts organizations operating in town-owned space all of which had similarities to Munroe in terms of programming and operating environment. 

All selected organizations offer either artist studios or community arts education programming. Three of the five organizations have both. TDC was able to speak by phone to the Executive Director at each of the five arts organizations identified. 

Structure of the Lease Agreements

While all benchmarked organizations did enter into a lease with the town, two distinct models for structuring lease agreements exist: minimal rent with full maintenance responsibility and moderate rent with minimal maintenance responsibility. 

Model 1

The most common model for municipal leases among benchmarked organizations was to pay essentially zero rent – typically $1 per year – but assume full responsibility for all of the maintenance of the building—[These include Munroe, and the community art centers designated as “C,” “D,” “E,” and “F.” See the table below] This type of lease agreement was in place at four of the community art centers.  Given the range of dates when each of these programs entered their respective facilities, this appears to be a model that has been in place for decades and proven itself beneficial to municipalities and arts centers alike. 

Model 2

The second model, which appears to be less common, requires that the tenant arts center pay rent to the town for the use of the building, but in return the town takes on the annual maintenance expense associated with the building.  Only one art center in the benchmark to employ this model [“B}.  It should be noted that in this case, where the arts center does pay rent back to the town, the rate per square foot is well below the market rate.

The model for the lease as well as the specifics of the contract are linked to several other aspects of operating the facility including the commitment to capital improvements, further requests for public funding and requirements regarding building code compliance.  Findings about the derivative effects of the structure of the lease include:

• Within the context of these lease agreements, towns have taken different approaches to buildings that do not comply with building codes, in some cases recognizing the financial constraints of the arts organization.   For example, whereas “F” was able to raise funds to renovate its building at the time the organization moved in and bring the building up to code, “E” did not have access to these funds and consequently has been allowed to occupy the space despite its noncompliance. It is not clear what the extent of the code violations may be in these buildings, but it is reasonable to assume that they are not life-safety related. 

• While lease terms vary, they closely relate to the expectations for and commitment to capital improvements.  The longer the lease term, the more comfortable arts centers become with committing funds for capital improvements.  For example, when “D” first signed a lease to operate their facility it was on a month-to-month basis.  It was only after securing a 30-year lease that they performed a major renovation to install the ceramics studio, jewelry studio, finish the second floor gallery space, and put in handicap access.  Similarly, “F” completed a $700,000 renovation at the time they received their 20-year lease.  In the most striking case, “E” of fundraising for a $400,000 renovation for one of their two sites, which is under a 10-year lease, but will not commit to its second site, which is even further behind code, due to the short duration of the 3-year lease. 

• Once the lease terms are determined, if the arts center is paying essentially zero rent, it does not go back to the town for additional support related to the facility.  “C,” “”D,” and “F” stressed the importance of this point, noting that if the town was able to provide the center with a facility at no expense, the art center was under an obligation to demonstrate the benefit to the community that the building could produce while fully supporting any maintenance and capital needs. 

While the organizations selected for the benchmark were included because they hold agreements with towns similar to what is being proposed for the Munroe Center for the Arts, it should be noted that other art centers have benefited from an array of more generous approaches by municipalities which in some respects constitutes a third model.  For example, the New Arts Center in Newton was given their building in perpetuity by the town of Newton in return for their commitment to occupy and renovate what had been an abandoned building.  In towns such as Northbridge, Holyoke and Lowell, MCC staff report that the towns are actively collaborating with nonprofit arts groups to provide facilities that will house the organizations.  These examples, while outside the structure that is being proposed for the Munroe Center for the Arts and consequently not thoroughly explored in the benchmark, do demonstrate the approach taken by towns intent on sustaining arts organizations within their communities.