Under the terms of the agreement, the artists have until March 1 to vacate their apartments and studios. In return, New Gold will waive an estimated $600,000 in past due rents and will pay the upwards of $35,000 in legal fees the tenants have run up to fend off eviction. Headed by Lloyd Goldman, New Gold is a wholly owned subsidiary of BLDG Management Co.

"This will allow us to continue working with local officials to create plans for new residential development in the neighborhood," says Michelle Berliner, vice president of BLDG. "It will continue the progress that has occurred in areas surrounding the city's waterfront."

The property consists of eight adjoining structures of four to six stories totaling 400,000 sf. Formerly used as a tobacco factory, the site's oldest structure dates to 1870. New Gold acquired the property in the early 1990s and began converting it into below-market live/work studios for artists as part of an arts district redevelopment plan.

But New Gold officials and their engineers said last year that the facility had become unsafe and proposed its demolition, sparking the furor with the artist colony and local preservationists. "On a daily basis, this building experiences significant structural shift as indicated by crack monitors," says Berliner. "It is in imminent danger of collapse."

New Gold officials say they have invested more than $30 million to date in the property and expect the ultimate redevelopment to cost more than $100 million. The company's request to actually tear down the structure is scheduled to be considered in the courts in late March, a move local preservationists oppose. The company will also legally challenge the district's historic designation by the city, which would restrict any redevelopment to seven stories for part of the site and five for the rest.