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The Social Life of Artistic Property

The Yellow Building

William Powhida

A Proposal-in-Progress for a Building That Owns Itself 1

One of the most pressing problems for working artists in New York City is the cost and availability of studio spaces. Currently, Bushwick, Gowanus, Greenpoint, Long Island City and Harlem provide concentrations of a studio spaces. Williamsburg was home to a large number of artists and studio spaces, but the gentrification of the area by developers and professional classes has transformed the formerly underutilized industrial spaces into luxury condominiums and boutique hotels. The property values in the area have skyrocketed since the 1970s and ‘80s with development rapidly increasing over the last decade.

Consistently since the 1950s, artists have occupied areas of the city that were in some way underutilized. In the case of SoHo, artists squatted and occupied buildings condemned by Robert Moses for his never realized plan of bridging the East and West Side Highways. The concentration of artists studios were followed by the development of commercial art galleries, and eventually converted into a residential and retail district, but for decades, SoHo was the center of the New York art world. In the early ‘90s many galleries moved to another underutilized section of the city, Chelsea, due to the decline of industry in the area. Over the last decade, Chelsea transformed into the central hub of the commercial art world in the city, but it has never been an artists' community like SoHo, the East Village, Williamsburg, Bushwick or Gowanus. Unlike Chelsea, these areas were and still are able to provide both work spaces and residential living spaces at "reasonable"2 costs to artists. This situation is changing rapidly in Bushwick as more artists seek out studios in the desirable artistic community. While there are a great number of artists in Bushwick, there are many more non-artists including professionals who also seeking out residential housing in Bushwick due in some part for its reputation as an artistic community. As Bushwick transitions from an industrial area into an arts and service driven economy, landlords are presented with an increasing number of options for renting, leasing, and selling their properties. The major issue here is that landlords can transform commercial studios into residential housing or sell their properties for incredible profits to real estate developers. Landlords can make significantly more money renting to professionals than to artists who, as a class, are relatively poor compared to their peers with similar levels of education.

Generally, most artists are unable to compete economically with the wealthier classes or small businesses for control and access to commercial spaces.

Eventually, as was the case with other art communities like SoHo or Williamsburg, artists will be priced out of Bushwick without any remuneration for the cultural value they add in making areas more desirable to wealthier classes, while also being blamed for their role in the cycle of gentrification including the displacement of existing residents of communities like Bushwick. While artists can and should lobby for their communities, fundamentally the decision is not theirs to make. The use of property is determined by landlords within the limits of existing zoning laws, which can also be rewritten to suit the needs of developers. The logic of capitalism and the economics of growth is to seek a return on an investment, either through an increased sale price or rental price. It is in the property owner’s interest to see property values increase. As artists contribute to developing the cultural value, specifically in the spheres of Street Art and Visual Art, of an area, exemplified by this year’s huge turnout for Bushwick Open Studios and the proliferation of art galleries, landlords discover that they can increase rents and earn greater income from their personal investments.3

This is wonderful if you are a landlord in New York City or a property developer, but it is also a depressing reality for artists like myself. I rented a studio in Williamsburg for over three years at a fixed rate from a twenty-one year lease holder below market value. The building—which he bought for $13 million in the ‘80s—was recently sold to a development group by the landlord for $68 million dollars. The development group plans on tearing down the building and replacing it with a boutique hotel marking the final transition of Williamsburg, for me, from a creative community to an international tourist destination for wealthy foreigners. None of the tenants in the building had any say or input in the sale of the building, and who could argue with the logic of such an enormous profit from the sale? From the landlord’s perspective, is the deal of a lifetime and the realization of a small fortune. The economic gain clearly outweighs and social or cultural impact on the lives of the tenants.4 Here one individual is presented with a decision about the future of a building relative to the economic interests of the development group with money and the current tenants who cannot compete. The city sees a boutique hotel and the commercial development as a money multiplier and often shares developers’ interests in “growing” the economy. The boutique hotel will create construction jobs, service jobs, while increasing tourism and spending at the retail stores and restaurants in the community that will ultimately increase city tax revenues.

Simply put, individual artists cannot compete economically with developers, although their role in the food chain of economic development is often unaccounted for and certainly never remunerated by the city or state for their role in making the neighborhoods attractive to developers and wealthier professional classes. As Caroline notes, artists are sometimes renumerated in non-monetary ways by their access to wealthier classes. It’s an important distinction to understand that as a class, artists are often materially poorer than peers with similar levels of education.5 Artists are then displaced to less desirable (to developers and professional classes) or underutilized areas6 of the city like Bushwick and begin the process all over. Unfortunately, in the case of Bushwick, the development is happening with increasing speed. Further, the development that displaces artists also displaces existing residents as well, who are also likely to be low-income, working-poor, and working class families. They are also forced to relocate in the face of increased competition for housing from wealthier individuals and businesses who are willing to pay much higher rents, often without question or likely an understanding of how they their activity will impact the existing community.

Although lower-income and immigrant communities are often the most vulnerable to displacement, artists are also vulnerable to the same processes. There is a greater awareness among artists of the impact of their activity on communities and ironically, how it precedes their own displacement along with the existing communities.

This paradoxical knowledge is too often met with with resignation and feelings of inevitability. Historically this process ends with a migration of artists to some other area, but New York City is a finite space, and there are only so many permutations of this process before there will be no viable alternatives for low-income artists to afford housing and studio space. It’s difficult to imagine artists living and working on aging cargo ships off the coast of the Rockaways.

Instead of meeting this paradoxical knowledge with resignation, artists might consider an alternative, which involves taking control of the decision making regarding the use of the properties they inhabit by buying the commercial properties before they become economically desirable to competing groups and maintaining sustainable rental situations for the long term.

Proposed Plan for Artists and Other Working Creatives

To buy a commercial property as a trust or corporation that would hold the building in perpetuity as studio space. The trust, foundation or corporation would allow as closely as possible for the building to own itself. Private property and ownership are not abolished, but the terms are modified to provide a way around the decision making of an individual owner or developer. This poses a stewardship model based on collective need within the capitalist market system.

There are a few key ideas to consider before getting into the complicated reality of this very idealistic proposal. The key idea is that no single individual or group owns the building.  Ownership becomes oriented away from individual possession and the profit motive. Practically speaking, a business entity may be the best way to legally own the building as an asset and manage its interests.

The building, as a representation of the participants in the project, holds a few major, inalienable interests clearly defined in a mission statement.

The building’s first interest is to provide studio spaces for artists and working creatives at current market value necessary to pay for itself, and to keep the rents fixed and below market value in perpetuity.

The second interest is to use any accrued value for the building to replicate itself.

The third interest is to subsidize a certain number of artists’ studios for those not part of the initial cohort, when capital becomes available, after expenses are covered and reinvestment and upkeep have been met.

The fourth interest is to provide a limited number of ground-floor spaces to commercial and retail businesses in fields relevant to the arts and to the surrounding community, in order to provide revenue to support the building’s primary interests. Artists don’t necessarily need ground floor spaces or the foot traffic that street access affords. This also creates an opportunity to offer public-use space or provide an essential service to the community.

The building does have a fifth interest in remunerating any initial capital investments with a modest return, if possible. But all participants must recognize that the building is not a for-profit enterprise. No individual participant will be an owner of the building or any spaces within it, and no owner will be able to sublease space for a profit.7

Any individual participants or investors are acting on behalf of the building’s interests, and its mission statement. This requires participants to adopt a hypothetical perspective of the building itself, not just of the trust or foundation, and to act as stewards of the building's primary interests. If an individual makes a capital investment during the founding of the building, they are doing so on behalf of the building.

The goal of the building is to provide a stable working environment for artists with a fixed or at least rent-stabilized rental structure for the duration of their use of the space. In market terms, the fixed rent would provide long-term savings, as the cost of renting a comparable studio space would steadily rise in other situations, before likely being redeveloped into luxury condos. Artists would have the support and stability of fixed rent, as opposed to making a return through the eventual sale of the space, or shares in the space. This incentive and continuity could also forestall the migration of artists by breaking a link in the process of gentrification and helping to end the migration of artists’ communities from place to place, while encouraging a solution that includes integration rather than displacement; or cooperation instead of competition. There is a real opportunity to share the knowledge it takes to collectively buy property with existing residents and non-artists the in the surrounding community and operating in solidarity with their interests. One example would be attending community board meetings in significant numbers to support local representatives fighting luxury housing development. To do this, we have to communicate, raise awareness and develop mutual advocacy strategies to help each other. Cooperation can’t stop at the boundaries of the building.

The sixth and seventh interests of the building are meta-interests, in building the environment around the building: to provide a transparent model for the building’s replication by others who find the building is at capacity or who live in other places. Instead of appearing exclusionary or limited, the building is able to provide interested groups with a practical manual of how to organize, raise funds and establish another “yellow building” themselves. This also serves the building’s second interest in replicating itself.

This leads to the final, seventh interest of the building, which is to establish a legacy for itself by supporting artists within a market system through the application of cooperative, communal principles, as opposed to competition. By working together, pooling resources and attracting cultural and philanthropic investors, artists might be able to challenge the current economic order and establish some control over the decision-making for their own community and gain some real agency.

This proposal for The Yellow Building, or towards a building that owns itself, is very idealistic. In application, the proposal requires an overwhelming number of legal, economic, cultural and social details to overcome the challenges any idealistic project faces. In general, I do not believe that these hurdles are insurmountable, but they are monumental, and if it was easy to create a building that owns itself, it would already exist. Having learned a little bit about intentional artistic communities and cooperative studio spaces like Westbeth, this model’s most radical feature is orienting ownership away from individual self-interest towards the building’s interests. It is an imperative that the building’s interests be put first. This singlemindedness about the building’s interests sounds a little like a new aesthetic or an object-oriented ontology, but to make this happen, we must consider the building to be a thing with its own interests that must be represented before its owner’s.

Strategic Planning for the Yellow Building

At the impetus of Caroline Woolard, the first step is to form an exploratory committee to conduct a feasibility study. This study will cover many issues in order to assess whether this is just pie-in-the-sky, big-idea daydreaming or a plausible alternative to the status quo of private property ownership.

I’ve started working with a small group including Jules DeBalincourt, who initiated a large public discussion about property in Bushwick; Lynn Sullivan; and Paddy Johnson. We have reached out to a number of stakeholders to discuss what this project might look like. Our process is organized around key questions:

Is it legal and feasible to create stewardship for the building through the formation of a trust, foundation, non-profit or corporation to represent the building’s interests?

Thus far, we have uncovered several models that will be added to a glossary of terms. We have found there are many legal models for cooperative ownership including specific language in a covenant that restricts conveyance (selling space/shares in the future) and use (artists/creative studio space).

We’ve been discussing an option that involves the formation of an L3C to create a business entity that would manage the building as an asset. This structure would allow us to find investors and avoid direct ownership of the property. We’ve learned that banks are not willing to finance land trusts; they are looking for a clear business model that allow a mortgage to be repaid through renting spaces.

How would the building be governed, with clearly and contractually defined terms of participation and stewardship of the building’s interests? How would decisions be made? Who would be making the decisions and in what format—consensus, direct vote, committee, board?

These decisions about collective ownership and management will follow after deciding on the kind of entity that we are interested in forming.

If legal structures and forms of governance can represent the building’s interests, what are the financial costs of the project?

We are starting to do basic cost analysis of real estate prices, mortgages and taxes. We are currently seeking help and advice.

Our sandbox-only numbers—not including many hidden costs such as non-usable space, insurance and maintenance—are:

building price: $4 million

down payment: $1.2mn

monthly mortgage: $21,697.00

rental price to cover mortgage: $1.60 per square foot

(A rental price of $2.25 per square foot would generate $117,636 per year beyond the mortgage. Charging $5 per square foot in the ground-floor retail space would generate more income.)

Based on a cost analysis, how much money would each participant be required to invest financially in the project? How could other artists get involved if there were extra studio spaces for rent? How would investors be attracted to the project? What, if any, return might they be able to see to encourage investors? What alternative returns might they expect including naming rights or art trades?

These questions are crucial not only to the financial health of the project but to our interest in tackling problems of privilege among artists, given that a small number of artists earn most of the money in the art market. In one of our most realistic scenarios, we might have ten artists with $100,000 to invest in the project. The immediate issue that comes up is how the artists could be treated as investors who will recoup their investment with a possible return that will not discourage an artist from putting the money into the project as compared to some other investment option. If it becomes a situation where the ten artists become ten individual landlords with their own individual units and space to rent, it will more closely resemble a more traditional co-op model with longer term complexities involving conveyance and use.

If the project is found to be feasible, how would the planning team move forward into an acquisition phase? What would be the timeline for executing the project?

Real estate prices are rising quickly and yet there are many available commercial spaces throughout East Williamsburg and Bushwick. While there may be many commercial spaces available, many of them are not highly suitable for this type of creative studio space. There are a limited number of existing spaces in these neighborhoods, and it has been proposed that we build on top of existing single-story commercial spaces through targeted variances in zoning. This might be a possible solution, but also would require much more money, obviously, and a great deal of expensive planning. It is very difficult to achieve re-zoning, but additional foot-area rights might be attractive to investors. One of our planning meeting guests suggested a very interesting strategy to counteract the pressures of residential real estate zoning by adding value to commercially zoned areas to preserve and create working class jobs for local residents. The strategy involves building up in commercial zones to add more space for light-industry, art studios, and office space without displacing existing tenants.  

How can we help protect participants against the challenges of being an artist and general uncertainties of life? What contingencies will be in place in the event of life or career changes? If the project is feasible, how would participants be able to exit? What would be the terms of the financial commitment?

We are trying to mitigate the external pressures such as life or career change by limiting the scope of our project to work-only, rental spaces. Leases for studios will be subject to some periodic demonstration of a reasonable studio practice (broadly defined) by the governing body of the building. Subleases for artists who for various reasons (illness, residency, childbirth) will be handled by the building management to help prevent for-profit subleasing. By maintaining a rental structure, participants will be able to exit according to the terms of their lease.

If the building were large enough to allow for additional renters, what would the selection process involves? Lottery, application or some other process of selection? What would be the contractual and legal terms of the rental agreement to protect the building’s interest and prevent for-profit subletting?

This is one of the most difficult issues that we still haven’t discussed in any depth, other than worry about it. At this point, it seems that involvement is a possible self-selecting mechanism, although no answer will serve everyone who would want to participate. It is essential that whatever we do has the possibility of being replicated and expanded to serve as many interested parties as possible that are not already served elsewhere. Instead of focusing on selection, we will focus on replication.

If the project were to be executed, how would it be systematically documented to provide a manual for replication? How would it be distributed to interested parties?

We are not working with any pure model of transparency at this point, but are making efforts at documenting our meetings and creating resources based on our research. Lynn has created and continues to work on a resources and information document.

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Clearly these are only a few questions that I have thought of without ever having owned a property or participated in a cooperative studio situation, and these are short-term questions aimed at the establishment of The Yellow Building, not its future.

The name, Yellow Building, comes incidentally from using my friend Jade’s pack of American Spirits to illustrate certain ideas about the building to him. It’s simply the name I have in my head for the project.

Caroline Woolard, along with the Arts and Labor working group and the Mapping Working Group that includes Erin Sickler have all challenged me to think about an alternative to the current real estate situation facing artists. Caroline also challenged me to think deeply about the scale and feasibility of the project in its inception. She pointed out the enormous commitment the project requires in time, money, trust and labor. Her experience establishing and then running a cooperative studio for five years has given her a perspective on the idea that I do not have. Intellectually, I have some understanding of the responsibility a project like this would require, but even if we do not prove to be up to the task at this point in our lives, given the diversity of the participants this project would require, I still believe that a feasibility study is very much worth the time and effort. It might, at the very least, yield a proposal for others to execute, and create new approaches and alternatives to individual ownership of property—an investment that severely limits the decision-making of artists and their communities in New York.

  1. Note: The proposal for a building held by a trust or corporation, not individuals owning shares such as a co-op, has only been sketched out in broad strokes. There is much work to come, but, as Caroline Woolard has pointed out, “having a project is better than not having a project.” ^
  2. The cost of living is much higher in New York City than most cities. ^
  3. Currently, artists in the 17-17 Troutman building, which is privately owned and a busy anchor of Bushwick Open Studios, are experiencing trouble with their landlord. Another artist I know just lost his space at the 56 Bogart building, which is also privately owned. ^
  4. Anne Fensterstock’s book on artist migration from the 1950s onward, Art on the Block, came out in 2013. ^
  5. Hans Abbing has written a sociological analysis of artists called “Why Are Artists Poor” that explores these issues in detail. http://www.hansabbing.nl/DOCeconomist/SUMMARY.pdf. Class is not only defined by income level. ^
  6. A participant at the first town hall meeting suggested conducting our own vacancy surveys since the city routinely under-reports vacancy rates. ^
  7. Technically, one avenue is to create a “covenant” during the formation of a co-op to put strict limits on what an investment share can be sold for. The building could also buy back shares from initial investors through the board or trust. It’s also possible to form the building initially as a co-op and then turn it over to a trust, which is much more stable in the long term, after financing has been secured. ^

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