Economic Development

Work of Arts

Paducah refines a way to restore a decaying community.
by | July 2007

The house Mark Palmer lives in is a brick beauty. Built in the 1850s in the Lower Town section of Paducah, Kentucky, it also houses Palmer's gallery of paintings and the studio where he puts watercolor to paper.

Palmer, who moved to Lower Town in 2002, had been a Washington, D.C.- based artist until he got wind of Paducah's Artist Relocation Program: a variety of financial incentives aimed at luring artists to live and work in Lower Town. The neighborhood had its drawbacks: It was a crime-ridden slum. But it just happened to be full of century-old Victorian, Romanesque and Italianate homes and once-charming bungalows that time and neglect had diminished. Palmer's house, in fact, had been so structurally decayed that it had been condemned.

But Paducah was offering Palmer a good deal to move there. And it was doing so on a bet that if it could attract artists to the area--own homes and become full-time residents--it could transform the derelict part of town back into a vibrant, viable and productive neighborhood.

The program was launched six years ago, and today, Lower Town is on its way to becoming a national destination for artists. The 30-block neighborhood is full of studios and restored older homes, with newly constructed buildings mixed in. During the week, artists work in their studios, mow their lawns and shop at the supermarket. Toward the weekend, visitors fill the sidewalks, wander in and out of the galleries, eat at newly opened restaurants and stay at local hotels.

The concept behind the relocation program isn't revolutionary. Economic development officials in cities and states all over the country have already keyed in on the start-up value of artists. Through the use of subsidized rents or sales tax breaks, painters, sculptors, glass blowers, weavers and the like can be enticed to open studios and set a tone and stage for turning around a set of city streets. The programs in use are wide ranging. Maryland and Rhode Island, for example, exempt artists from paying sales and income taxes on their work--provided the works are produced and sold in specially designated arts districts. A handful of states--Connecticut, Kentucky, Maine, Montana, New Mexico and North Carolina--allow an artist's estate tax to be paid in artwork he or she produced. Cities from Fort Lauderdale to Grand Rapids have developed "live-work" spaces for artists in an effort to revitalize an ailing neighborhood. These localities typically partner with a developer to rehab an old warehouse or cluster of buildings into residential lofts and studios, which are available to artists at a reduced rent.

Paducah's program goes way beyond these approaches. By focusing on home ownership and personal loans directly to artists themselves, the Artist Relocation Program is creating a stable, permanent arts community in Lower Town--one house at a time. And the program has achieved a success its original planners never could have envisioned. "We thought it would be great if we could get 10 artists," says Tom Barnett, Paducah's planning director. "With 15, we thought we could change the neighborhood forever." Today, more than 70 artists have moved to Lower Town from across the country, and they are defining the city in the process.


Paducah lies in Western Kentucky, at the point where the Tennessee River joins the Ohio. An industrial rail and steamboat center, the city of 26,000 sits halfway between Nashville and St. Louis, on the way from Chicago to Memphis. While its own population is relatively small, Paducah is a draw for 70,000 county residents and an outlying population of many more. The relatively dense downtown of tall buildings and the city's close-knit inner neighborhoods speak of a history as a center of trade.

Lower Town was Paducah's first real residential neighborhood, located just a few blocks from downtown and the riverfront. Its first houses were built before the Civil War, and by the 1920s, it had grown into a leafy, compact grid of some 300 structures. Gingerbread Victorians and stately Queen Annes mingled with brick stores and warehouses, along with smaller houses and bungalows. During the second half of the 20th century, however, as residents moved out to the suburbs, Lower Town began to deteriorate. Slumlords bought up the houses and sliced them into apartments; by the 1990s, Lower Town was 70 percent rental property. As the buildings decayed, so did the quality of life in the neighborhood. Crime shot up, and Lower Town became known as the place to find drugs and prostitutes. "This was a neighborhood that had been abandoned not only by the government, but by the citizens, by everybody," says Barnett. "In Lower Town, you were either passing through or looking for trouble."

In the early 1980s, Paducah made a half-hearted attempt to preserve the neighborhood's buildings by designating the area a historic district. That helped stabilize the conditions of some of the homes and enhanced the city's regulatory powers in the neighborhood, but it didn't do anything to improve the homes. There was no proactive initiative, and there certainly was no grand vision of how to improve Lower Town.

That all began to change in 1999, when Mark Barone stepped out onto his front porch. Barone is a painter and printmaker who had moved to Lower Town 10 years earlier. When he walked out his front door and witnessed a drug deal across the street, he was both angered and energized. He began to envision a plan to revitalize Lower Town--a plan he could take to city hall. "We needed to save the neighborhood," Barone says. "Either the city was getting on board or I was getting the hell out."

Barone started by working with Barnett in the planning office to get Paducah to adopt a tougher rental license ordinance--a means of getting rid of the slumlords in Lower Town. The city increased the number of inspections it conducted in the area and strongly enforced new codes to gain control of the neighborhood.

But Barone and Barnett were thinking on a much bigger scale. With the Paducah city manager and a city commissioner, they traveled to Rising Sun, Indiana, a small town that had initiated a modest program to attract artists to its Main Street. They began to see how a similar program could be tailored to fit Paducah. Within months, they were able to persuade the city to let a Barone-Barnett team develop the Artist Relocation Program. The city even gave them a first-year operating budget: $43,000. The planning duo also was able to put together an additional $100,000 in seed money, which they used to purchase Lower Town homes. "Then we just sat around a little table in my office and started making up the program," Barnett says. "We sat around telling lies to each other--or, as Mark would say, a vision-- and that became the program."


What they created differed from other cities' efforts in a few very important ways. First and foremost, the Artist Relocation Program is based on homeownership. The city partnered with Paducah Bank, a locally owned financial institution, to give loans to program participants. The bank, which is itself located in Lower Town, offered 100 percent financing to artists to purchase and rehabilitate the homes. Even more important, Paducah Bank agreed to offer loans at values well beyond the actual appraisal of a house--sometimes as high as 400 percent over the appraised value. That was crucial because property values in Lower Town were so depressed.

As an example, Palmer's house had, in its condemned state, only dirt for its floors and no glass in the windows. The city bought the 3,500- square-foot house for $1,200 and spent $37,000 to stabilize it before giving it to Palmer at no cost. Palmer then spent $250,000 to restore the home. But at the end of the day, the house was only appraised at $100,000 because the neighborhood was still so undesirable. That's why it was so critical that Paducah Bank extended loans that were in excess of the appraised value of a house. "Eventually we made the decision to just stop having appraisals done at all," says Larry Rudolph, senior vice president of the bank. "That will give a lot of bankers some real heartburn. But the first thing you have to do is take your loan policy and disregard it."

The bank evaluates each artist who wants to participate in the program on an individual basis. And it has turned down what Rudolph calls "a fairly good number" of applicants who didn't make the cut financially.

The loans underscore the idea that the program is designed for artists to own their homes. In most other cities' programs, an initial developer rehabs the space and then rents to artists. When the neighborhood starts to take off, property values go up and the artists are forced out. "They treat the artists like urban manure," says Barnett.

In addition to the easier loan terms from Paducah Bank, artists participating in the relocation program have access to a number of other incentives. The city pays a $2,500 bonus for artists to help cover professional rehab fees such as architecture consultations or landscaping plans. None of the materials purchased for construction and rehabilitation are taxed. In addition, the city works to keep the artists' professional life stable: It pays for the artists' Web sites and markets their work nationally.

The city also has taken steps to keep the new homesteaders and their neighborhood safe. It has opened a police substation in Lower Town, lowered speed limits and installed more stop signs. And to make Lower Town visitor- and resident-friendly, the city has invested in additional sidewalks and streetlamps.

For Charlotte Erwin, a painter and printmaker who specializes in marbled watermarks, the change in Lower Town in the five years since she first moved in "is incredible." She and her husband, Ike, a bookbinder, were the first couple to take part in the Artist Relocation Program. Their 1898 Queen Anne home was in desperate condition when they bought it in 2001. The roof had leaked for decades, trees were growing through the foundation and the house's delicate gingerbread detailing was lying in pieces in the overgrown flower garden. Today, their rehabbed house, which includes their studios and a gallery, sits on a sunny corner popping with hibiscus, iris and daylilies. "This has been an amazing thing for us," says Erwin, a native Kentuckian who had moved to Illinois before coming back to her home state.

While the Erwins' home typifies the renaissance of this neighborhood, the city has also made efforts to retain the low-income residents who lived in Lower Town for decades. The city housing authority has replaced some dilapidated low-income housing with new single-family homes. And the revitalized area has attracted other businesses to Lower Town, including restaurants, attorneys' offices and small architecture firms. "We wanted this to be about keeping the neighborhood," says Barnett. "We don't want this to be a neighborhood of just artists. You need a lot more than that to make a real neighborhood."


The success of the Artist Relocation Program has surpassed anything Barnett or Barone imagined. Artists have moved to Lower Town from as far away as Los Angeles, San Francisco, Tucson and New York. Nearly 35 structures have been renovated. Another 25 are in the works, and more are in the planning stages. There's new construction in Lower Town-- overseen by a historic and architectural preservation board--for the first time in half a century.

Barnett and Barone have met with dozens of officials in other cities across the country who are interested in the program. "There's a number of cities working on programs like this, but the one example almost everybody points to is Paducah," says Bruce Knight, the planning director of Champaign, Illinois, and the chair of the American Planning Association committee that selected Paducah for a national award in 2004. "They developed a creative solution that can be transferred to other places."

In the end, the Artist Relocation Program has been a powerful economic tool for the city. Officials estimate the program has attracted $20 million in direct, private investment and brings in hundreds of thousands of dollars per year in sales taxes and other tourism-related revenue. And, of course, property values in Lower Town have skyrocketed. "We didn't set out to make this a national model for economic development," Barone says. "We just wanted to make the neighborhood better."


When a city decides to spur economic development by attracting artists, it faces esoteric questions: How do you define art? Who is an artist? What kinds of works are art?

In some places, the answers have led to lists of pre-approved art forms and styles. In Maryland and Rhode Island, for example, where artists who work in specially certified districts are exempt from sales and income taxes, artworks must fit into one of several predetermined categories approved by the state.

But planners in Paducah wanted something different in Lower Town. When they developed the Artist Relocation Program, they decided to open it to artists of all kinds, says Mark Barone, the artist who originally envisioned the plan. "We didn't care whether they were amateur, mid-career or professional--writers, musicians, painters or sculptors."

The program has attracted textile weavers, songwriters, photographers, bookbinders, fabric makers, illustrators and jewelers. "We just want to see that they're producing shows, have a portfolio, have an arts education," says Paducah city planner Tom Barnett.

Because the program hinges on homeownership and personal loans from the locally owned Paducah Bank, artists who want to participate in the program have to meet certain financial standards.

Aside from ensuring an artist's ability to pay back the loan, though, no one vets an applicant's artwork to see whether it conforms to some predetermined definition of art. "We're not going to judge the quality of the work or the content of it," Barnett says. "We just want to know that an artist is serious."


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