There’s a simple way to manifest affordable artists’ housing in San Francisco (and elsewhere) that’s a win-win, even though the current tax bill hobbles philanthropy. It’s a method that can also meet other housing needs and equally serves tenants and those who make it happen.
The city of San Francisco knows that somewhere between 10,000 and 30,000 residential units in the city are empty so that the owners of those buildings can declare a business loss. Attorneys for California Lawyers for the Arts, and others in the legal profession, verified that a person seeking a loss for tax purposes would get the same benefit by leasing a building to us for $1 a year.
We’re proposing a collaboration between those who seek losses for tax purposes and our nonprofit artists’ housing project. An unoccupied building qualifies as a tax loss for 10 years, but we enter such an arrangement with the understanding that the project will buy the building, when it no longer serves tax purposes, for a pre-arranged price. The buyer of the building gets the tax break and also realizes a profit in 10 years.
Bohemia Redux particularly wants buildings zoned both residential and commercial. Residential spaces can be available for affordable rents, while the businesses run by the nonprofit in commercial spaces generate the additional income needed to maintain and buy the building. If businesses operate in commercial spaces leased to the nonprofit, they don’t pay exorbitant commercial rents—and stand a much better chance of thriving.
The nonprofit operates as a coop. In exchange for affordable rent, resident artists provide a given number of hours to support the coop’s businesses, which lowers labor costs and increases profitability for those businesses as well. Since the businesses offer venues for tenants’ work, performances, classes, and services, tenants have ample reasons to support them.
There are also ample reasons for seekers of tax benefits to collaborate with us, going far beyond the tax benefits and eventual profit. For those interested in social impact projects, this one is innovative and beneficial to the tenants, the city, and the arts—and guaranteed to earn the best public relations and goodwill. An ordinary transaction for tax purposes transforms a person into a patron of the arts and will very likely be the most stimulating and entertaining tax loss ever. Also, we have to say, the coolness factor is off the charts.