Lofts and studios for low-income artists may suffer a major blow if the Republican effort to overhaul the tax system is signed into law.

An amendment to the tax bill passed by the Senate would strike artists’ housing from the list of qualified groups who can benefit from federally subsidized low-income housing. If the provision makes its way into the tax bill that moves on to the White House, it would forbid developers from using housing credits to build affordable housing with a preference for artists.

Moreover, as written, the law would also render all existing artists’ housing developments built with housing credits retroactively ineligible for the benefit—creating a sudden tax liability for the investors who have used these credits for years.

The change comes in the form of an amendment introduced by Senator Pat Roberts, the Republican senior senator from Kansas. His amendment, which passed with the Senate tax bill at 3:00 a.m. on Saturday, includes a simple line-for-line language swap. Where current law carves out a special exception for individuals “who are involved in artistic or literary activities,” the new bill would instead specify a benefit for those “who are veterans of the Armed Forces.”

By eliminating the advantage for artists and giving it to veterans instead—without changing any other language—all artists’ housing developments built with tax credits could soon be on the wrong side of the law.  

Bankers and other investors, not artists, would pay the immediate price.

“There is a lot of concern out there in the housing credit community for all the existing artist housing that is potentially subject to tax credit recapture,” says Peter Lawrence, director of public policy and government relations for Novogradac and Company, a national certified public accounting and consulting firm. “I think, once tax policymakers are aware of those potential consequences, there will be pressure to try to address that.”

Lawrence adds, “We do have limited time, and there are lots of people trying to get fixes to various provisions in either the House or Senate tax bills. There is going to be a capacity problem, in that there’s only so much that tax staff can try to work on at any one time.”

The clock is ticking, as members of both houses of Congress race to pass the most sweeping tax bill in 30 years, and the first legislative victory of the Trump era, before breaking for the holidays.

Roberts’s amendment may number among the many provisions of the legislation whose unintended consequences are just coming to light. With this amendment, banks and other investors who purchased tax credits legally could see their investments in housing credits challenged, canceled, or even recouped by the Internal Revenue Service.

The change affects the Low Income Housing Tax Credit, a proven program for building new affordable housing and preserving existing affordable units nationwide. Investors buy LIHTC credits in order to reap tax benefits over a decade; developers in return receive equity to build below-market projects. Congress created the LIHTC program with the Tax Reform Act of 1986. Almost 3 million affordable rental housing units have been built using LIHTCs since.

Developers in Baltimore, Minneapolis, Harlem, Houston, Pittsburgh, and scores of other places have used federal tax credits to build affordable lofts and studios exclusively for artists whose income falls below median levels. Such efforts have been lauded as a critical way to help preserve and support a city’s cultural community, especially in cities like New York that are experiencing an affordability crisis. Cities often use artists’ housing as a development tool, to rejuvenate abandoned or vacant industrial properties.

But they have also garnered criticism: Artists tend to be much whiter and better off financially than other residents of low-income housing. According to a 2016 report by the Institute on Metropolitan Opportunity at the University of Minnesota, most of the residents (82.4 percent) of artists’ housing in Minneapolis and St. Paul are white. Few of these residents (3.3 percent) receive rental assistance.

“Artists can often be the first into neighborhoods that have experienced a lot of disinvestment and are seeing a lot of vacancy and problems. Artists are often great risk-takers,” says Linda Metropulos, director of housing and neighborhood development for Action Housing in Pittsburgh. Housing tax credits, she adds, are “helpful for ensuring that the housing doesn’t just get flipped once the neighborhood changes.”

In high-income cities with soaring rents, artists who qualify for affordable housing because of their income may look like the middle class by the standard of other places. Metropulos says that low-income developments with a preference for artists usually get built in places where artists are already living—so artists’ housing means keeping artists in place.

“People who use arts to generate their revenue are just as deserving as people who go to hospitals and work in the maintenance department,” Metropulos adds. “The people that we’ve served are low-income people. That’s what the program is for.”

At the same time, it’s not clear that housing for artists is mutually exclusive with—or even in competition with—housing for veterans.

The single line change in Roberts’s amendment fixes a standard in the original LIHTC legislation. Existing law requires projects that get housing tax credits to meet a “general public use requirement.” That limit was designed to prevent employers from building housing exclusively for their employees and other similar abuses. Social clubs such as the Benevolent and Protective Order of Elks or the Freemasons, for example, cannot use tax credits to build homes for their members. Instead, any residents who meet the low-income standard are eligible for units built with tax credits.

There are three exceptions to the general public use requirement. Developers can use LIHTCs to build housing developments with set-asides for residents with “special needs.” Or for those “who are members of a specified group under a Federal program or State program or policy that supports housing for such a specified group.” The Housing and Economic Recovery Act of 2008 added artist housing as a category eligible for LIHTC developments.

Artspace, a national nonprofit real-estate developer for the arts, claims to have pioneered the use of LIHTCs in building housing for artists in St. Paul, Minnesota, soon after Congress created housing tax credits in 1986. Two decades later, the IRS challenged an LIHTC-funded project co-developed by Artspace: Pittsburgh’s Spinning Plates Artist Lofts (which is now part of Action Housing’s portfolio). “Across the country, dozens of states were using LIHTCs to fund housing specifically for farm workers, teachers, unwed teen mothers, firefighters, and other groups,” reads a history of Artspace and how it successfully lobbied Congress to change the law in 2008. “The potential for impact was severe: millions of dollars in tax credits and thousands of affordable housing units could be lost.”

The IRS dropped its challenge after the 2008 bill passed, and Spinning Plates has remained open ever since. Housing credits have been critical to keeping the neighborhood accessible for the artists who first moved in back in 1998. “We have people who have been here for the whole 18 years—of 37 apartments, there are 5 or 6 people who moved in when it first started,” Metropulos says. “We’re determined to hold onto the affordability and artist nature of this housing.”

Critics have asked whether giving priority to artist-loft revitalization developments diverts a much-needed subsidy from other, more vulnerable populations—veterans, for example. But developments for artists and developments for veterans are structured so differently that it’s not clear stripping credits from housing for artists would necessarily open up more housing for veterans.

The broader problem of housing insecurity among veterans has received much attention in recent years. The U.S. Department of Housing and Urban Development estimates that that some 40,000 veterans are homeless on any given night, and another 1.4 million veterans are considered at risk for homelessness, due both to a lack of affordable housing as well as issues related to their military service, including substance abuse, mental disability, and post-traumatic stress disorder.

The housing needs of veterans are often so severe, in fact, that the Veterans Administration and HUD launched a voucher program called Veterans Affairs Supportive Housing designed to meet their special needs. (It was created in the 1990s, but didn’t receive committed federal funding until 2008.) The HUD-VASH program makes LIHTC-funded developments affordable for veterans and also adds resident services, which are critical for successful supportive housing for veterans.

According to the Corporation for Supportive Housing, all 50 states, the District of Columbia, and U.S. territories have some kind of housing credit incentive for building supportive housing. Several state housing credit agencies set aside specific credits for supportive housing for veterans. “No one objects to making sure that veterans are also part of the safe harbor treatment,” Lawrence says.

Roberts’s office did not respond to a request for comment. The future of artists’ housing is only one of many questions that Congress will need to resolve if tax credits will continue to work as a tool to build more affordable housing going forward.