Even the Taxman Hateth the Artist
Posted by: admin in Americans pretty much hate artists, Exploiting artists, Misunderstanding the artist's life, The struggles of artists, Artistic failure in AmericaBefore we get back to our regularly scheduled blogging about petty, self-defeating artistic jealousies and treacheries, here’s a recent news item from Minnesota Public Radio that bodes further ill for artists struggling to keep paying their rent.
According to the story, starting in 2008 artists may have a “hard time finding places to live and work for cheap” (as though it’s currently that easy). This is because a new IRS ruling says low-income artist lofts are not in compliance with federal tax regulations.
The IRS’ Section 42 Low Income Housing Tax Credit generally helps pay for anywhere between 35 percent to 60 percent of the capital costs of building or renovating a building that “serves the general public.” However, Section 42 says a building can’t qualify for the low-income housing credit if it offers housing only to members of “a certain social organization.” This appears to be the tax sticking point with artist lofts, and the IRS has now begun more closely scrutinizing such housing.
Of course, this conflicts with much of current civic policy, as, according to the story’s author, Marianne Combs, many cities across the country are “using affordable housing to attract artists, in the hopes they will bring with them urban renewal.”
Minnesota-based Artspace, a real estate developer that specializes in developing artist live/work spaces in blighted areas of America’s cities, is working to appeal the IRS’s determination process on Section 42.
Bill Mague is portfolio director for Artspace. He says he doesn’t understand how after 20 years of financing artist loft developments, the IRS could rule that his organization isn’t serving the general public.
“All of our projects have people who fit every possible demographic - age, gender, religion, sexual orientation, primary source of income,” says Mague. “And so that’s why I don’t think we come even close to any of these concerns that the IRS is voicing. And I think if they were to prevail, it would significantly impair a very powerful federal housing tool.”
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February 6th, 2008 at 10:10 pm
I just wrote about this myself. I write almost exclusively about artist housing across the country, and I’m stunned. What a bonheaded thing for the IRS to do this late in the game. I’m anxious to see how the appeals play out.
February 6th, 2008 at 11:57 pm
Hi Cory,
Thanks for weighing in on this. Housing for artists is such a heavy issue. Thanks for grappling with it on your blog. By the way, do you know about Art Home? My friend Esther Robinson is starting a nonprofit org to address the issue of finding housing for artists. I’d love to know what you think, and I’d love to have a dialogue with you on this issue. Email me at admin(at)artisticfailure.com.
February 8th, 2008 at 7:48 am
I found you through Cory’s blog. My husband is a ceramic artist and we make our living by selling his ceramic art. We’re moving to Paducah, KY to participate in their Artist Relocation Program. Over the past few months I’ve been looking into many ARPs and Artist Housing opportunities. What the IRS has done makes me feel physically ill. What is wrong with this country of ours?
Thanks for alerting me. I will now go and stomp around the house and have good rant before I do something more productive about this issue!!
February 11th, 2008 at 5:05 pm
Thanks for writing in, Madre. Best of luck to you and your husband on the move to Peducah. I recall reading about the program when it first started, and even though I’m pretty entrenched here in Minnesota I couldn’t help but fantasize about living in an artist community like this. Let me know if you do think of something productive that we can do.
Meanwhile, Roger Valdez, who wrote the original article about the situation in Seattle, wrote to me at another email address (for my dayjob; must’ve found me on the web). The letter is attached below. For future reference, Friends of Failure can contact me more directly at: admin@artisticfailure.com (.)
THE LETTER:
Hello Mr. Fallon,
I hope this e-mail gets to you. Thank you for your blog, for your work at NAG and for posting my op ed from last month. I appreciate your point of view and one thing I have emphasized to people who make policy and developers is that arts and cultural organizations must get better about developing plans for their futures and then figuring out what that plan means in terms of space and real estate.
Currently I am putting together a business model that includes supporting arts organizations with advice, planning and eventually acquisition and development of their own homes if it makes sense. It isn’t something that is currently done. There are plenty of developers out there willing to buy an arts organizations property and plenty of real estate agents ready to make a percentage to help find a spot if they have money.
What is missing is the translation of an arts business plan into a real estate agenda. How does a small or medium size arts organization plan for expansion?
Again, thanks for your perspective. And if you have ideas for ways I could help–even if its speaking at a conference or meeting–I would be happy to talk about that.
Roger–