Artist Utopia Spoiled by Legal Dispute in the old Rainier Plant

A lockout and lawsuit may be brewing.

It sounded so simple. And so cheap. For $3,000, and considerable sweat equity, musician Matt Brown would join one of three artists' co-ops colonizing the old Rainier Brewery next to I-5 (now topped the green Tully's "T"). Having moved up from Los Angeles with his band, Trespassers William, a couple of years ago, Brown predictably found that affordable space to live, rehearse, and record was almost nonexistent. So to build out his own 1,000-square-foot live/work space in the ArtsBrewery complex, and then pay rent of just $650 a month, sounded too good to be true, like he'd won the lottery. In fact, a lottery is how he earned a place in the artists' co-op, Sietch 22 (named for a clan warren in Dune).

It turns out now that it was too good to be true. Brown, 29, and his fellow artists are still waiting to begin work on their raw spaces, while the estimated cost of the build-out has jumped tenfold, to $30,000 per unit. After a lot of membership churn, Brown's group is still seeking to recruit a few more members to fill the top three floors of its assigned building. As a result, Brown thinks, the developer might ditch the idea of affordable artist housing.

"What was originally sold to the public as an 'arts community' will just turn into more expensive condos," Brown said in an e-mail. "A sad bait-and-switch using artists as the bait."

Of the three artists' cooperatives that joined the project beginning in late 2003, only one has actually started working on its members' dream homes. That co-op, called Sabaki, includes among its members Conan Gale, a filmmaker who also works as a paid consultant for the developer, Rainier Commons. Gale blames "the structural complexity of the building" for delays. He says extensive seismic work has been done at ArtsBrewery, including costly new shear walls.

The third co-op, Nia, was recently locked out of the building; it received a notice of lease termination from the landlord on March 20, giving the group 30 days to respond. Nichole Leigh, a painter and Nia member, alleges that Rainier Commons has encountered so many cost overruns in retrofitting the old brewery that it's now trying to shift expenses, renegotiate terms, and otherwise make conditions so adverse that Sietch and Nia will just walk away from their leases, paving the way for more prosperous tenants. Leigh says Nia is now consulting its attorneys.

Rainier Commons declined to discuss its leases with the co-ops or other tenants. Regarding escalating costs, spokesperson Eitan Alon said in an e-mail, "The $3,000 was Conan Gale's informal estimate of the lowest potential cost of materials only, needed to achieve occupancy of a single live-work unit."

Though it's not an official landmark, the highly visible, long-defunct Rainier Brewery is an object of continued fascination and affection among Seattleites, who see their urban landscape increasingly taken over by indistinguishable condo towers. When plans were announced for the ArtsBrewery development in 2003, it seemed like a perfectly enlightened-Seattle way to repurpose a quaint roadside attraction, a third of which is presently used as a Tully's coffee-roasting plant and HQ.

But the effort to bring the decrepit property into the digital age seems to be increasingly quixotic. The Benaroyas, a leading Seattle real estate family, bought the complex in 1999, but flipped it just four years later, when it became clear they couldn't make a decent return. And the current developers may also be struggling. Only one commercial tenant besides Tully's appears to be in the complex: the Jam Box music rehearsal studios. The owner of another prospective tenant, Vertical World (still listed on the project's out-of-date Web site), told me, "They tried to change the lease that I signed. I said, 'This is not a good sign.'" So, despite having invested in plans for a new location of his climbing gym in the brewery, he abandoned the project.

A walk-through at the ArtsBrewery suggests that it's a great place to visit, but you wouldn't want to fix up this white elephant. There are 21 variously attached structures, with a huge, inactive smokestack towering overhead and a bronze-cast goddess of beer standing guard—a pre-Prohibition figure from the brewery days. The brightly painted mélange of factory buildings looks cool from the highway, but inside they're cold, bare, and dusty—concrete and cinder block, rawer than raw. This isn't SoHo factory charm, with the threads from old sweatshops blown artfully across wide-grain wood floors. There aren't any boutiques around the corner, either, just the Sound Transit yard across the street. To the east, speeding cars on I-5 pass eerily close yet silent outside the windows, like the viaduct without the benefit of Elliott Bay.

In an area zoned for light manufacturing, the city prohibits residences, except for artist live/work conversions of existing structures. This exception dates to the '80s, and it has allowed conversion projects like the Sunny Arms and Bemis Building to go forward. But those are artist-owned buildings, where the co-ops get to make the decisions.

"You can hear the roasters from Tully's, the rumbling," says painter (and Sietch 22 member) Shai Steiner enthusiastically. She talks hopefully of including ArtsBrewery in future First Thursdays, of making communal runs to Costco with other artists.

This day, she and Brown are touring prospective co-op members through their three floors of the building, each to be subdivided into 10 units of 1,000 to 1,300 square feet. Trying to market the raw space "is a part-time job," admits Steiner, a third part-time job in some cases, and they haven't even begun the build-out. The artists are expected to hang the Sheetrock, hook up the plumbing, bring their own appliances, and hire their own contractors for specialized work.

"The developers that I represent are going to be delivering a shell for the artists...utilities, heat, the windows, corridors," Gale said in a December 2004 interview with KUOW. "But it's really up to the people occupying the spaces to take it from there and bring it into the expectation of living space. And I think that very few major development companies...are willing to take that risk and let the tenants drive."

But artists say the definition of the building "shell" has been in dispute, resulting in a costly shift of the burden of renovation away from the developer and onto the co-ops. Rainier's Alon disagrees: "The leases have always stated that we would provide a shell and the co-ops would build them out. This has never changed."

Rainer Commons is a partnership between local real estate investors and Ariel Development, a SoDo company led by Herzel Hazan and Shimon Mizrahi. The pair got their start in gas-station mini marts and hotels—including several Silver Cloud hotels scattered throughout the city, one across the street from Safeco Field. They're also in a partnership converting the historic Alaska Building downtown into a condo/hotel.

Members of the Nia co-op report (and Rainier does not dispute) that Hazan is building his own duplex with a private rooftop above their space. Indeed, it's not uncommon for developers to claim the pinnacle of their prize properties: Samis CEO William Justen did just that after his company kicked artists out of the Shoe Building and redeveloped it.

Nia members also claim Rainier has forced on them the cost of insulating their roof below Hazan's projected penthouse deck, adding greatly to their renovation budget. This is a pattern, says Leigh: "Over time, it seems like Rainier Commons has been saying, 'You have to pay for it because it's not in the lease.'" She cites other examples like windows, wiring, and finishing exterior walls. At Sietch, located next door to Nia, Steiner echoes those complaints about the ceiling insulation and more: "They haven't necessarily finished everything they said they would do." Connecting the water, gas, and phone lines has also fallen into this area of off-lease ambiguity. "It's definitely been a big negotiation." Rainier responds that internal insulation was specified in its original building permits.

In a brief telephone conversation, Alon (Ariel's chief operating officer) said ArtsBrewery would open next month. When asked about project delays and cost overruns, and the old Benaroya estimate of $18 million for a renovation, he scoffs: "I can tell you we are way, way, way below that number."

What about more commercial tenants? "We will be flooded with people wanting to get in," he predicts. Part of the "synergy," he explains, will be the core community of co-ops. "We've got the artists inside doing their TIs [tenant improvements] right now."

Well, some of them at least: those in Gale's Sabaki co-op. The other two groups are weighing their level of commitment to the build-out costs, which at this point are about the same sum one might put down on a Belltown condo mortgage—except without the assurance of future ownership. Trying to remain optimistic, Nia's Leigh says, "None of us wants to have a big, huge battle. Having us there adds to the value of the project."

Or they did add that value, helped brand the ArtsBrewery, regardless of its future uses and tenants. In his KUOW interview, Gale referred to the bad old days of the '90s, when artists were lured by teaser rents and developers' sweet talk to improve their rental spaces with sweat equity: "And right as soon as they've finished it, they're evicted...and the second string [of tenants] comes in at double or triple the price." Of ArtsBrewery, he said, "This is not going to be the experience that we've all had."

That's what Sietch and Nia are hoping. But when do they say "Enough" and walk away from their rising investment of money, time, and hope? "I don't know," says Heather Wofford, a painter and Sietch member. "I'm not sure where I would top out. It's getting very close."

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