Five Points Arts & Cultural District

Five Points Cultural Commission

Funding Received: 2015
Montgomery, AL
Funding Period: 1 year and 5 months
May 26, 2016

Last month, our lawyer for Five Point’s Cultural Commission said to me, 

“I’ve negotiated leases that took several weeks and some that took a month, but never one that took six months!” 

SIX MONTHS! Yep, you read that right. 

That’s how long it took to negotiate a ten year lease for two run down buildings at the center of our project. We just signed the lease a few weeks ago and work has already begun!

A 10 year lease. You read that right, too. 

The owner of these two buildings had no interest in selling his property or improving it. A long term lease allowed him to maintain ownership of his property and allowed us to achieve our desired change in the neighborhood without having to have the capital to purchase the buildings. The key to making this work is to ensure the lease amount is affordable enough to make money on the deal while also ensuring the lease runs long enough to recoup the cost of tenant improvements. In our case, 10 years was more than enough.

Our small non-profit is developing commercial properties in a low to mixed income neighborhood in Montgomery, Alabama. We are located in a racially and socio-economically diverse area and have a desire to create spaces where folks can interact and build relationships with neighbors whom they might otherwise never cross paths. 

A local foundation matched our ArtPlace funding bringing our working capital to $300,000. This allowed us to purchase an abandoned car garage for $25,000 and two other tax sale properties for $100 each. We then decided to pursue long-term leases with two other boarded up buildings on the same street.

What did we learn in the lease negotiation process?

  • There is always a way to make a deal work. You have to get creative, keep negotiating, and never give up if it’s important to your project.
  • Community Credibility is invaluable. The property owner asked around town about the credibility of our organization. If we had not been known, I don't know that he would have signed on.
  • Stuff happens, press on. The property owner was hospitalized for several months, extremely delaying our timeline and process.
  • You can write anything into a lease. Really, anything can be made legal as long as it is agreed to by both parties. In our case, this included the property owner putting up $60,000 for us to use to improve his properties. It also meant that we are taking on all liability and costs associated with the property during the lease period.
  • A good lawyer is worth every penny. You need one who is looking out for you and who can play hardball with the other party.
  • Look in unconventional places for inspiration. We found that traditional shopping mall leases were very similar to what we were looking to do. When was the last time you went to the mall?

What strategies have you used to obtain control of properties that you didn't own?