Every urban neighborhood has its pioneers. The painters, photographers and musicians who colonized downtown loft spaces more than 30 years ago were far ahead of the current housing boom. Seeking relief from high rents in Venice and Santa Monica, they squatted in abandoned industrial buildings, braved the crime-ridden Skid Row streets east of Alameda and dodged surprise inspections by the Fire Department.

In 1981, Los Angeles passed the Artists-in-Residence-Ordinance, allowing downtown artists to legally live and work in an industrial zone provided they passed all local building and safety codes.

The district is the most effective and well-organized residential community in downtown, with advocacy groups like the Los Angeles River Artists and Business Association and the Historical Culture Neighborhood Council. It was given a higher profile four years ago when the non-profit Southern California Institute of Architecture moved into an old freight depot just west of the L.A. River.

A smattering of restaurants and stores along Traction Avenue are the area's only services. But this former no-man's land is changing.

Among the largest landowners is the upscale boutique hotelier, the Kor Group, whose portfolio includes the Viceroy in Santa Monica. Kor plans to convert seven warehouses from Palmetto to Hewitt streets (and known as the Barker Brothers Portfolio) into condos, adding retail, landscaping and street lighting. Kor is also refurbishing existing artist lofts at 500-530 Molino Street, adding a pool and two rooftop decks. Rehab costs, which Kor did not divulge, included the relocation of dozens of artists-in-residence.

Both the Molino Street and Barker Brothers lofts symbolize the past and future of this district: The revitalized 1920s buildings are cavernous live/work spaces, just like the ones settled illegally decades ago. But at what brokers estimate to be more than $350 per square foot, the prices are hardly for starving artists.

"We have no desire to suburbanize this district like Old Town, Pasadena," said Kate Bartolo, senior vice president at Kor Group.

"On a per-square foot basis, this district has the best residential value in all of downtown," Bartolo said. "But people down here cover all income levels: everything from a sculptor living off grants to a computer animator working for the studios. We want to create a model that retains the diversity of this area."

Still, gentrification has had its effects.

Tim Keating, president of the Los Angeles River Artists and Business Association, moved into the district in 1984 and as recently as last year, he was paying $825 a month for a 1,200-square-foot loft and roof garden. After his building was recently purchased, the rent jumped to $2,000 per month. Keating was able to buy into one of the first condo projects in the district, the Toy Warehouse Lofts, at 215 S. Santa Fe Ave. He purchased a 1,100 square foot loft for around $250,000.

New city-backed projects like the L.A. River Park, which would transform former rail-yards into a green zone, are being discussed. But renewal has created tension. A lawsuit filed by the Southern California Institute of Architecture aims to stop construction of a nearby site into highrise towers.

The future of the Artist District depends on strong leadership from City Hall, Keating said.

"Gentrification is going to happen," he said. "Developers like Kor have overpaid for land down here, and now they're forced to pass those costs back to tenants in order to make money."

Meanwhile, Keating notes that only a few of the artists living and working in the district have the income to remain. At one time, he said, there was talk of setting aside 25 percent of the district's space for low-income artists. "Given that land prices have climbed tenfold, that's not realistic," he acknowledged.

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