Soap Factory Safe for Now, Following Deal to Resolve $3.8 Million Debt Issue
The show will go on for the Soap Factory, as the financially troubled art organization has reached a resolution on its approximately $3.8 million debt.
In what essentially amounts to a deed transfer, the Soap Factory will sell, or relinquish ownership of its building—a converted soap flake factory in Southeast Minneapolis—to RJM Construction, the Soap’s largest creditor. In exchange, the Soap Factory will be able to complete its stalled renovation and remain in the building as a rent-free tenant for two years.
The Soap Factory will occupy 6,500 square feet on the building’s lower level.
After the two years, RJM will sell the building to an investor, not yet publicly identified, who plans to repurpose the historic structure as an office building.
The deal comes three months after Golden Valley-based RJM Construction forced a sheriff’s sale of the property to protect its own financial security. While working under contract on a top-to-bottom renovation of the Soap building, RJM had incurred substantial expenses that the Soup Factory was unable to reimburse.
“The last three years have been very difficult for us financially,” Soap’s board chairman Roy M. Close said in early December. “We thought we had a path forward, but to date we have not been able to secure the financing we need to pay RJM for the work it has already done and to complete the project.”
The Soap Factory bills itself as a “laboratory for artistic experimentation and innovation” that has supported artists for 26 years through providing space, funding, and audience and artists connections. Programming was suspended in response to the sheriff’s sale.
Soap Factory isn’t the only Twin Cities arts organization feeling the pinch. Intermedia Arts in Minneapolis sold itself in November to an affordable housing-focused real estate company. Zenon Dance Company recently announced its final season, citing significant cuts in funding from long-term corporate and foundation supporters.
At the time of the sheriff’s sale, Soap Factory had six months to save its home by raising an amount equal to the high bid at the sale. During the sale, Edina-based investment firm O’Brien-Stanley Partners effectively bought the Soap Factory more time to work things out by purchasing a portion of the Soap’s debt, for $1.2 million.
As part of the deal between RJM and the Soap Factory, RJM will repay O’Brien-Stanley the full cost of its purchase, as well as pay the subcontractors and other creditors to whom the Soap Factory is indebted. The deal will also give the soap $100,000 to eliminate accumulated operating debt.
Soap Factory board chair Roy Close suggested it’s not the ideal solution, but they’re taking it in stride.
“This is a bittersweet moment for the Soap Factory. We know that some of our constituents were disappointed that we were not able to find a way to continue in an ownership role,” said Close. “[But] RJM’s offer keeps us alive and gives us an opportunity to reinvent ourselves… From our perspective [this] is not an end but a new beginning.”