Is it fair to use housing subsidies to build live-work spaces for artists?

My working-poor friend couldn't get into the Projects, so she's rented this house instead.

One of my friends was homeless this past Christmas. She was on a waiting list for an apartment in the Projects. Evidently openings are scarce in her hometown of Braddock PA, where 2/3s of the residents are African-American and the median household income is $18,473. She ended up renting part of a house instead.

While most public housing is intended for people like my friend, there’s a subset of units being built in historic neighborhoods as mixed-use spaces for artists. In 2016, the Institute on Metropolitan Opportunity (IMO) examined four such projects. They noted:

“They are often visually spectacular, offering superior amenities – underground parking, yoga and exercise studios, rooftop clubrooms – and soaring architecture. Very often, these white-segregated subsidized projects are created by converting historic buildings into housing, with the help of federal low-income housing tax credits, historic tax credits, and other sources of public funding. Frequently, these places are designated artist housing, and – using a special exemption obtained from Congress by Minnesota developers in 2008 – screen applicants on the basis of their artistic portfolio or commitment to an artistic craft.”

Although such units are built with public funding, they’re far too expensive for my friend Helen. In fact, they end up furthering segregation. White artists' income may be low compared to their social peers, but are high compared to wages for the black working poor.

The foyer of the A-Mill Artist Lofts, a publicly-subsidized live-work space in Minneapolis. From their own website.

“Unlike typical subsidized housing, however, the residents of these buildings are primarily white – in many instances, at a higher percentage than even the surrounding neighborhood. These buildings thus reinforce white residential enclaves within the urban landscape, and intensify segregation even further,” IMO reported.

These units are not being occupied by impoverished millennials coming up with the next Great Idea. This study found that most of the artists inhabiting subsidized live-work housing were middle-aged. This survey echoed that. In other words, these artists should be in their prime earning years.

We can’t even count on these units continuing to be live-work spaces. “There is a demonstrated tendency for live-work space to revert to purely residential use, regardless of how it was permitted or represented,” wrote architect Thomas Dolan.

The gym at the A-Mill Artist Lofts, a publicly-subsidized live-work space in Minneapolis. From their own website.

Who really benefits from these schemes? Developers, of course. “Look at every opportunity to finance projects by evaluating their eligibility for tax credit financing through the New Markets Tax Credit (NMTC) and Low-Income Housing Tax Credit (LIHTC) Programs, which are designed to support investment in communities and meet the housing needs of residents,” advises accounting firm Baker Tilly. In 2014, almost a quarter of all apartment new-builds were being done with Low Income Housing Credits.

My friend lived in a motel on Route 30 outside Braddock while she was homeless. One room, three people, but at least she had heat and a bed. 

Cities, too, are desperate for some way to repurpose their abandoned industrial real estate. We all know the stories of how development followed artists into Soho or the Village and drove property prices sky-high. But that was in land-locked Manhattan, where anything habitable is worth millions. Whether that same phenomenon will play in Peoria, or Buffalo, or Milwaukee, remains to be seen. Meanwhile, billions of dollars in subsidies are being redirected away from people like my friend. 

Want to learn more? See here and here.