EASTHAMPTON — By this Sunday, tenants of One Cottage Street must decide to either sign a new lease at $15 per square foot or give written notice of their departure. For William Hewitt, who has made cabinetry and furniture in his studio there for 44 years, leaving the building means downsizing and undergoing a monthslong process of hauling equipment either to a dumpster or to his small farm in Whatley, where he plans to construct a small building to serve as his new workshop.

“I would have to work much harder just to pay the rent,” said Hewitt, 69. “At my age, you’re not thinking about that.”

The Cottage Street Tenants Association, which was formed in reaction to the sweeping rent increases being implemented by building owner Riverside Industries, in conjunction with the Boston nonprofit ArtStaysHere, said in a press release Monday that Hewitt is just one of more than 25 artists who “have already left or given notice.”

According to Melissa Pike, chair of Riverside’s board of directors and Building Committee, One Cottage Street’s new building manager NAI Plotkin has received only 16 notices of departure, 13 of which cite the new leases as their reason for leaving. The building has about 100 tenants in total.

Hewitt rents a 1,410-square-foot studio space and a smaller space above it that he uses as a spray booth, which he estimates together to be about 1,600 square feet. Each month, he said, he pays about $1,143 in rent for these spaces — a rate of about $8 per square foot. Hewitt said that the new $15 per square foot per year rate all tenants in the former mill building will soon pay would not only increase his workload, and likely his prices, but has also made him feel “unappreciated.”

“I’ve been involved with Riverside, the company, a lot more than many of the people here,” said Hewitt. “The hardest thing for me is going to be not having interaction with the people downstairs.”

The “people downstairs” are Riverside’s clients, whom Hewitt has been taking on trips to baseball and hockey games for years. Currently, he’s trying to find a way to keep that tradition going as he moves his business home, but because he will no longer be in the building, he said he’s having trouble “working out the logistics.”

Linda Batchelor, a One Cottage Street tenant of 30 years, will also be moving her work home. Previously, Batchelor created prints and collages in her 414-square-foot space in the building, which she rented at a $10 per square foot per year rate. Now, she is working on moving her supplies into the unfinished basement she recently remodeled, and a bedroom upstairs.

Batchelor, 73, said she couldn’t pay the increased rate because what she does is “more a practice than a business.”

“When you have a practice like that, you’re driven by something other than profit because it’s not a particularly profitable thing to do,” she said.

Hewitt and Batchelor said they felt “lucky” to be able to move their studios home, though they will both be newly limited in what they can create. Hewitt will no longer have the space to craft large cabinet sets, and Batchelor will no longer have the space for her large collage work.

But other tenants, they said, do not have space at home for their work, or have bulky supplies they must find a new home for. Those tenants will spend the next two months not only packing up belongings, but searching for new homes for their businesses.

“It’s hard, and I’m really sad about it,” said Batchelor. “But I know it’s a complicated situation, I don’t think it’s black and white.”

A long time coming

Riverside Industries, which is dedicated to the empowerment of adults with disabilities, was awarded the property at One Cottage Street for just $1 in 1976 by J.P. Stevens. Previously a factory space, the 174,000-square-foot building at the corner of Cottage and Union streets offered Riverside a location to host many programs enriching the lives of individuals with disabilities.

Over time, the building’s size and age, along with inflation, have increasingly burdened the nonprofit with maintenance costs.

In April, Riverside announced that it would undergo strategic planning focused on improving “people, programs, and place.” A main vulnerability Riverside faces has to do with their “place,” the hulking building that has become a source of expenses that they struggle to reconcile with current income streams. By increasing rents, they hope to bridge that gap.

According to Pike, the cost to operate the building is about $1.1 million a year, and the deficit between rental and other income and what is needed to operate the building has grown to about $300,000.

Of the building’s roughly 100 tenants, Pike said 15 pay less than $9 per square foot per year, like Hewitt. These are tenants who have been in the building for about 40 years or more. New tenants already pay the $15 per square foot per year rate “or close to it,” but with the majority of tenants paying less than that, Pike said, Riverside struggles to keep up with the building’s needs.

Riverside announced the rent increase to tenants in late April. Currently, rents in the building range from about $5 to $15 per square foot, but Riverside’s rent equalization will bring all tenants into leases with rents of $15 per square foot. Pike said the average studio size in the building is about 750 square feet.

The nonprofit has known for some time that rents would have to rise for the building to remain operational. In 2018, the previous leaders of Riverside initiated another strategic planning process that would have brought all rents to $12 per square foot per year. Tenants were resistant to the increase then, Pike said, and leadership stalled the change. Then, a bout of global and internal upheaval pushed any increases off even further.

“Ultimately, we weren’t successful because the pandemic hit and we had a change in leadership,” said Pike.

During the pandemic, Riverside offered tenants a 15% discount on rental rates. Hewitt said that he and other tenants opted to pay the full amount anyway, as Riverside was “having a tough time too,” but this disruption nonetheless delayed the possibility of increasing rents to more sustainable rates.

Still, new tenants coming to the building around 2018 signed onto leases at $12 per square foot per year. As of this year, with all tenants’ standard yearly rental rate increases, typically 3%, those tenants are all now paying about $15 per square foot per year, Pike said. She noted that 30 of the building’s tenants came to the building during or after 2018 at rates of $12 per square foot per year or higher.

Aside from building maintenance, Riverside’s strategic planning also has goals of bolstering employment after the pandemic left them with more than 50 vacant positions, with a focus on becoming a choice employer and offering opportunities to individuals with disabilities or who speak English as a second language.

They also hope to expand various programs, including a beloved art program. But Riverside leadership says that rent increases are solely for the purpose of maintaining the building, not for their programming, which receives outside funding.

Riverside’s programs and their participants occupy only a fraction of the building. Riverside also operates a distribution warehouse while housing more than 100 tenants, most of whom are artists. The so-called Cottage Street Studios make up a majority of those tenants. Outside of grants, donations and fundraising, the warehouse and tenants serve as main sources of income for the building.

Both Pike and Markus Jones, senior director of development and strategic operations for Riverside, expressed that it has been hard to see some of the building’s longest-standing tenants depart, but also worry that without this increase in rental income, building expenses would threaten Riverside’s programming and clients.

“If we close down, they have nowhere to go,” said Pike. “We’re in the hole.”

Some in the community worry that an exodus of artists from One Cottage Street will change the creative culture of the city. This concern resulted in the City Council issuing a resolution in support of “affordable artist work spaces.”

Jones said there is currently a waiting list of potential new tenants ready to fill vacancies at the new rate, but declined to say how many people were on this list.

Lease disputes escalate

The Sept. 1 deadline represents a one-month extension from the previous deadline, which went into effect after tenants raised concerns over the new lease terms they had received and asked for more time to make their decisions to stay or go.

Questions that surfaced about whether artists would be able to hold their usual Open Studio events were cleared up with the revised lease. The new agreement also addressed tenant concerns about its three-year duration by reducing it to one year with two one-year extension options.

However, the Cottage Street Tenants Association and ArtStaysHere have taken issue with two clauses in the lease that they are calling a “gag order,” and also disagree that the $15 rate is fair.

The first clause referred to by tenants as a “gag order” prohibits them from using Riverside’s name on any stationery or advertisements, as well as the creation of advertisements or campaigns that “impair the reputation of Riverside, its management, or the building or its desirability as a location for stores or offices.”

The second clause declares that any intentional effort to interfere with Riverside’s operations or “damage Riverside’s reputation or disrupt advantageous business relationships” will be considered a breach of the lease.

The Tenants Association says these clauses are in “direct response” to their advocacy campaign against the rent increases, which Riverside leadership did not deny, saying the lease language is a way of “protecting” Riverside.

“That type of contact, that type of effort could have a negative impact on our ability to do business in the community,” said Jones, referring to emails and letters local media and stakeholders written by some tenants. “This is not a gag order … I just see it as an organization doing what it can do to protect itself.”

The Tenants Association and ArtStaysHere have also taken issue with the market analysis, prepared by BankESB’s Hometown Financial Group, that has been cited in support of Riverside’s decision to charge the new $15 rate. According to BankESB CEO Matthew Sosik, that analysis was not meant to be used to determine the building’s rental rate.

In an email exchange between Ami Bennitt of ArtStaysHere and Sosik, Sosik stated that “we would never recommend that such a report be used as a substitute for local data and true comp analysis. We had no idea that Riverside was going to use that report to negotiate leases.”

In an interview with the Gazette, Sosik said, “We provided a very high level report. However, it was just a property report … The report in general just lacks the granularity, specificity, and detail. It was never meant to be a rent analysis.”

“Riverside’s intent here is all good, and they aren’t a real estate firm,” Sosik added. “The focus should be on a solution, not how we got here, what report was used or not used. All that should be set aside.”

But the Tenants Association and ArtStaysHere say that the properties in the report, which claimed a median rate of $19 per square foot, were not “apples to apples” with One Cottage Street. Bennitt said in an email to the Gazette that the groups tried to hire a Realtor to do another “comps study,” but that they couldn’t find one to take the job “as they didn’t want to get on the bad side of Riverside or going against Riverside clients.” Instead, the artists prepared their own analysis.

“That was done by calling various tenants at said properties, to see what they were paying,” said Bennitt. “So it’s not what every tenant is paying, which is kind of the point.”

This report compares buildings such as Eastworks in Easthampton and Indian Orchard Mills in Springfield, and claims a median of “$10-12/square foot, not $15.”

“Are there some people paying more? Yes. Are there some people paying less? Yes. We tried to find the median,” said Bennitt in a later interview.

But Pike said that these numbers are “misleading,” as many spaces in the included buildings have triple-net leases, meaning that additional costs of factors like utilities are not included in the base rental rate, but calculated and tacked on later.

Additionally, Jones stated that the market analysis was just “one small part” of the rationale behind the increase. Other factors were the building’s operating cost and rising rates of inflation.

“It was really just a snapshot to see what the market looked like,” said Jones.

Regardless of the rest of the market, Bennitt said that there is “no negotiating” and “no variation” when it comes to the new rate. The Tenants Association has called for variation in rental rates across studios based on size, proximity to amenities, and other factors. But Pike said that, in her experience as a commercial Realtor, “that isn’t how commercial real estate works.”

Bennitt disagreed, saying “they’re practicing renting a commercial property in a way that no one else is renting commercial property.”

Alexa Lewis can be reached at alewis@gazettenet.com.