Tax credits for affordable housing fund homes for artists

Should low-income housing tax credits fund middle class housing?

The view from Karen Divers' front steps in Greenmount West is about to get better. Once a block with vacant buildings, the empty space is a park-in-waiting, its upturned tree trunks a sign of the latest major public-private investment in the neighborhood.

Divers, 63, who has lived in Greenmount West for more than 40 years, likes the plans for a park, but the housing being constructed is not for her, she said — and not just because the City Arts 2 apartments are being marketed as affordable housing for artists.

"The rent is too high," she said.

It's a perhaps surprising assessment of a project financed primarily by low-income housing tax credits, $1.2 million of which were sold to raise more than $12 million in equity for the $15.9 million plan.

But the City Arts 2 project on Greenmount Avenue, which celebrated its groundbreaking this week, highlights the limited ability of these tax credits — the government's chief tool for building new homes for poor families — to reach the really needy. It also speaks to the tensions inherent in Baltimore's revitalization efforts, which are aimed at reducing vacancies and blight, lifting property values and persuading the middle class to come and stay in the city, while often funded with dollars nominally reserved for the poor.

"This is what has happened to affordable housing," said Peter Sabonis, director of legal strategy for the National Economic and Social Rights Initiative and a participant in the Baltimore Housing Roundtable, organized by the United Workers. "Affordable housing used to be housing for the poor and now it's housing for the middle class."

Greenmount West, tucked northeast of the train station near Greenmount Cemetery, feels like a neighborhood in transition. Murals splash across the walls, sunflowers and basil linger through October, and the buzz of homes being rehabbed fills the air.

Developers opened the first City Arts building on Oliver Street in 2010. Those involved in the projects say the first building has been a catalyst for the area, part of a broader strategy that involves an arts district designation, targeted code enforcement, vacant rehabilitation and other investments, like the new Baltimore Design School.

The goal is to create housing that "stimulates growth and stability," said Sean Closkey, president of TRF Development Partners, which is involved in the City Arts projects as well as other rehabs in Greenmount West.

For longtime homeowners, the changes could help build wealth in a way often unheard of in vacant and distressed neighborhoods.

Income caps for projects financed with low-income housing tax credits, such as City Arts, are based on median incomes for the metro area. But because the metro-area median is nearly double that of the city's $42,700 median, developers of City Arts and other projects financed with low-income housing tax credits can attract tenants with incomes that are pretty average for Baltimore.

The City Arts building, which received more than $3 million in tax credits and federal funds, has introduced "a different class of people" to Greenmount West in the last few years — but that's not a problem, said Leon Eppes, 42, of Baltimore, who was visiting friends in the neighborhood and is looking for work.

"I think everybody can live together," he said, adding that he credits the influx of artists with helping to reduce the area's violence. "It's excellent for the community, very productive."

Supporters say using low-income housing to subsidize artist rents in particular is a double win for the neighborhood — piggybacking off its arts district designation to support economic development while creating housing with rents that must remain pegged to the area's median income for at least 30 years.

"Unfortunately, in the United States we only look at housing through one lens, which is affordability. We don't ask the bigger question, which is: How do we address urban blight and disinvestment?" Closkey said. "What City Arts is doing is saying, 'Well, there seems to be a way to use the affordable housing tool to create a little bit of a different outcome.'"

Rents in the first City Arts building, which offers mostly studios and one-bedroom units, start at about $700, compared to census estimates of median gross rents in the neighborhood of $920. New tenants must have incomes that fall between about $24,000 and $37,000 for a single person, up to about $53,000 for a four-person household.

But the incomes of residents in the 69-unit complex, which screens for artists with an interview and has a waiting list, range more widely than those limits might suggest, said property manager Kimberly Lewis of Winn Residential.

About 12 units are reserved for disabled public voucher recipients, who are not necessarily artists and have minimal earnings. The building also does not kick people out if their incomes grow beyond the limits — and, she estimated, about 5 percent to 10 percent of the tenants fall into that category.

Emily Miller, 26, and her wife, both social workers, now have annual household earnings of about $70,000, Miller said. But when they moved in two years ago, she was a recent graduate student, manning an omelet stand at the Baltimore Farmers' Market, and could barely meet the income threshold.

Living in City Arts provided a level of security, as well as connections and better sales for Button Up, the couple's button and magnet company, which is designed to help nonprofits and other activists advertise and spread their message. The apartments were also a big step up from the couple's previous place in Greenmount West, which had mice and mold, windows that didn't open and doors that didn't close.

"It's been extremely helpful," she said. "It's a safe place to try new things that if I'm paying twice as much rent, I might not have the flexibility to do."

Sabonis and others said the subsidies provided through low-income housing tax credits are not deep enough to finance projects that could house people with very low incomes. But calling them "affordable" — especially in a city where nearly 72,000 households earn less than $25,000 a year — is disingenuous, he said.

"It's rhetoric, that's what it is, and once you dig deeper, you see that the level of unmet need is really great in this city and there's really no plan to meet that," he said.

In their efforts to revitalize Baltimore, public officials appear to be "almost consciously" reducing the supply of affordable housing, said Jeff Singer, an adjunct instructor at the UMB School of Social Work, who said the targeted incomes for low-income housing tax credit projects are too high.

"There are poor artists. Let's help the poor artists," he said. "Let's not help the middle class with public dollars."

Baltimore Housing Commissioner Paul Graziano said the City Arts projects accompany other city efforts in the area, some of which focus on the very poor. And both City Arts projects reserve units for voucher recipients, he added.

"We are very much concerned about preserving affordable housing, we are very much concerned about creating mixed-income housing opportunities and mixed-income communities, so I think it all comes together," Graziano said. "Some projects are going to be skewed in one direction, some projects are going to be skewed in the other."

The problems facing the city's very poor are less about housing and more about a lack of jobs, said City Councilman Carl Stokes, who represents the area and supports the City Arts projects.

"We need to do more work on that side than the housing side," he said. "I don't think the best policy is to try to find housing stock for [people] in the city who are living in poverty. The better solution is to find a way to get folks up and out of poverty."

A healthy city has a mix of incomes, added Charlie Duff, president of Jubilee Baltimore, a nonprofit developer that was a member of the City Arts development team.

"You wouldn't want every dollar of every program to do this, but once every five years — I'm really proud to be doing it," he said.

Nancy Rase, the outgoing CEO of Homes for America, an affordable-housing nonprofit also involved with the City Arts buildings, said her organization does not typically invest in housing with an artist preference, but was persuaded by the vision for the area — even when the idea met with some resistance.

"Some of the people, they called us capitalist pigs, if I recall correctly, and didn't want us gentrifying their neighborhood," Rase said. "It does start things and I think that is a valid and legitimate use of public funds. … Housing and community development go hand in hand. Would that be a total mission for us? No."

Painter Noah Hall, 35, moved into the first City Arts building when it opened in 2010 because "the price was right" and he liked the idea of a community that would let him focus on his art — as well as a landlord who wasn't scared by the idea of paint.

He declined to disclose his income, but said he is "very poor" and does not consider himself a gentrifier, though he's worried that in the long term the building may have that effect on the neighborhood.

"I'm hoping for the best for the neighborhood, but really, only time can tell," he said.

nsherman@baltsun.com

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