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RDA staff recommend allowing Lotus to convert Thornstenson project from 30 market lofts to 25 income‑targeted artist units
Summary
RDA staff recommended an addendum to a 2015 land transfer agreement so Lotus can use historic tax credits to build 25 income‑targeted artist lofts (proposed at 60% AMI) instead of 30 market‑rate lofts; developers said the tax credits make the project feasible, while councilors asked for more market and absorption data.
RDA staff told the council on June 16 that Lotus, the current owner of the Thornstenson building, is seeking a contract amendment to convert a 2015 land transfer and development agreement (LTDA) requirement of 30 market‑rate lofts into 25 income‑targeted "artist loft" units using federal and state historic tax credits.
Eric Gibson reviewed the LTDA’s history, identifying roughly five Thornstenson‑specific commitments in the original 2015 agreement — including subdivision, commercial leases, completion deadlines and access to 35 parking stalls — many of which staff said were never fulfilled. Gibson said Lotus paid $1.9 million to acquire the Proudfit and Thornstenson properties and later obtained federal and state historic tax credits that made the artist‑loft proposal financially viable.
Gibson told the council the proposed change will likely reduce the project’s appraisal and thus slightly lower city tax and fee revenue because the planned units would be income‑restricted rather than market‑rate. "Shifting to a smaller number of larger units as well as moving those units to income restricted product will have a small impact on the city's tax and fee revenues," Gibson said.
Lotus representatives said the building has been under their ownership for about a decade and that they have tried multiple development approaches. "If we don't do this ... we don't have a path forward on this project and ... it will sit vacant for the time being," Jake Bird of Lotus said, adding that tax credits and the 60% AMI target are necessary to make construction feasible. Lotus said the proposed units would include studio, one‑ and two‑bedroom layouts with some live/work space and a third‑floor clubhouse amenity.
Council members asked detailed questions about whether the city already has a surplus of housing in the 40–80% AMI range, whether mixed‑income approaches had been considered, and how similar low‑income housing projects have performed locally. Staff pointed to recent projects such as Q25 that struggled early but reached roughly 85% occupancy after opening and said the market absorption question remains a key issue.
RDA staff recommended approving an addendum to allow the artist‑loft conversion while noting that both parties had failed to meet several original contract obligations and that Lotus had invested money to keep the property. Councilors requested additional analysis of demand by AMI band, examples of comparable artist‑loft projects, and clarity on whether the change would be reversible if market conditions shifted.
No final vote was taken during the work session; staff said the item would return with additional information and that the RDA’s recommendation could be placed on an upcoming agenda for formal consideration.
