As early as the mid-1960s, artists began pioneering the economically-
depressed manufacturing zone of lower Manhattan known as SoHo where they found affordable "raw" or "as is" spaces large enough to both live and work (ie: lofts).
Delighted to receive rent for these often abandoned, derelict spaces, commercial property owners welcomed and encouraged the residential occupancy of their buildings. Using sweat equity, artists renovated their leased lofts converting them into habitable living/working studios, installing plumbing and electrical fixtures along with other improvements--generally at their own expense. The City, which was equally delighted by the stabilization of the property tax base, turned a blind eye to the fact that none of these buildings had a residential Certificate of Occupancy.
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By the mid-1970s, the number of artists living and working in lofts in SoHo had dramatically increased and revitalized the area. Trucks and loading docks began to disappear as light manufacturers fled New York at an unprecedented rate. Art galleries followed the artists to fill the vacancies and additional loft communities took root in TriBeCa, Chelsea, and Brooklyn. Loft living was no longer a secret. Ancillary businesses blossomed overnight to provide these new neighborhoods with residential services and amenities; trendy bars and boutiques were not far behind. Most notably, this urban renewal and economic development was established without any aid from city or state government subsidies. Property values began to soar and owner loftlords smelled a bonanza. |
Instead of being rewarded for making the pioneering investment that generated the growth of a viable economic sector, artists began to be harassed by building owners who hoped to capitalize on the sweat equity of their tenants. Real estate profiteering became rampant and by the late 1970s, every third loft building was in litigation. Owners often claimed they were unaware that artists were living illegally in their commercial buildings and--without the protection of residential laws--tenants were suddenly hit with exorbitant rent hikes and/or eviction notices to force them out. When the original tenants were evicted, loftlords could co-op the vacated spaces at an enormous profit. In many instances, the sale of one co-oped loft unit equaled the initial purchase price of the entire building. During 1978, the city issued many 90-day "Notices to Cure" (meaning: legalize the building or evict residents) in a hasty, ill-considered move that only made matters worse for loft dwellers.
In 1978, four concerned loft tenants in danger of losing their homes banded together and established the advocacy organization Lower Manhattan Loft Tenants (LMLT). At their initial meeting, they planned to target fifty loft dwellers--to their surprise, more than three hundred potential political activists attended. Soon afterwards, LMLT had organized a union of tenants living in lofts that spread across Manhattan from midtown to Battery Park. The coalition continued to expand its activist network through informative tenant meetings and action alert mailings and eventually included member lofts in three boroughs. By putting the creative resources of the loft community to work, LMLT endeavored to protect affordable housing for artists and their families in the volatile real estate market of New York. Starting on a local level, LMLT began to present loft tenants' views to their community boards, other tenant organizations, New York City Council members, and a mayoral task force. In 1979, they took the issue to Albany, where LMLT advocated the rights of loft tenants before the state legislature.
By 1980, many artists had lost their lofts. But, the increasing number of loft tenants exploited by building owners only served to spur on the lobbying efforts of LMLT. A historic precedent was achieved in 1981 with the passage of the Moratorium on Loft Evictions by the New York State Legislature. Signed into law by then-Governor Hugh Carey, this bill brought a one-year halt to the eviction process.
Although encouraged by the support of their elected officials, LMLT did not waste time resting on the laurels of this temporary success. Instead they mobilized an intensive campaign to lobby for permanent protection. While working in close cooperation with State Senate Minority Leader Manfred Ohrenstein on legislative language for a pro-tenant bill, LMLT Steering Committee members met with representatives of the Department of Housing Preservation & Development, the City Planning Commission, the NYC Chamber of Commerce & Industry, the Real Estate Board, and organized labor.
However, renewed harrassment and evictions finally prompted LMLT to endorse--with some serious reservations--a bill sponsored by the City, under then-Mayor Ed Koch, and work for its passage in Albany. As a result, the state legislature ammended the Multiple Dwelling Law to include Article 7-C (a.k.a. the "Loft Law") and passed the Loft Tenant Protection Act on June 21, 1982. Rents were stabilized and loft tenants were protected from illegal eviction.
The Loft Law brought order to the chaos surrounding loft buildings that had been converted to residential usage without first having been certified safe for such use. Prior to the law's passage, the courts had declared these buildings to be "de facto multiple dwellings," subject to the state Multiple Dwelling Law--meaning that owners were not entitled to collect rent unless the buildings were made code compliant.
The Loft Law established a program to legalize these properties while equitably balancing the rights and responsibilities of owners and tenants. It required owners to bring their buildings into compliance with residential codes within three to five years, but allowed them to collect rent while doing so. Once legalized, the loft apartments would come under rent stabilization, but owners were entitled to pass along most of the cost of their legalization work to tenants in the form of temporary rent surcharges to be implemented after obtaining a C of O.
In an attempt to counterbalance the astronomical increases in real estate value to property owners, loft tenants were granted a one-time right to sell--at market value--the original fixtures and other improvements that they had installed at their own expense.
Finally, the New York City Loft Board was set up under the law to adopt regulations for its implementation, to resolve disputes, and to work with tenants and owners to facilitate bringing their buildings up to code before the ten-year expiration date written into the Loft Law.
Not long after LMLT had established itself, loft dwellers in Brooklyn formed the sister organization BLT (Brooklyn Loft Tenants). In a united effort, LMLT and BLT began to lobby the state legislature. As a result, the Loft Law was ammended in 1987 to include protection that covered loft tenants in Brooklyn, as well as in several other satellite loft districts known as M zones.
The Loft Law covers approximately 800 buildings in Manhattan, Brooklyn, and Queens; on average, there are six residential units per building and approximately 10,000 loft tenants. From 1982 through 1987, the real estate value of these properties continued to rise and rapidly inflated the market. But owners resisted legalization, still hoping to sell their buildings at huge profits. Many succeeded--almost half of the Loft Law buildings changed ownership during this period.
Although the Loft Law was adopted in 1982, the majority of the early years were taken up with legal challenges to the law and arbitration decisions of the Loft Board. It was not until late 1985 that these challenges were resolved and the complicated rules and regulations were firmly in place for the legalization of loft buildings. Unfortunately, the process of code compliance was further slowed down by the fact that the City, still under Mayor Ed Koch, did not begin to enforce the legalization requirements until 1988.
Around the same time, real estate values started to become more realistic and formerly reluctant owners began to realize that residential usage of their buildings was not only a financially viable income source, but the most profitable in the falling marketplace. The legalization program was further enhanced by an overall economic downturn and scarcity of jobs that made construction costs lower than they had ever been since 1982, when the Loft Law was enacted.
By 1989, only 64% of the loft buildings covered by the law had begun to be legalized. But by mid-1992, 23% of the properties had completed legalization and obtained a Certificate of Occupancy, and nearly 90% had started the code compliance process. The Loft Law program was finally up and running and beginning to work.
To guarantee its success, the Loft Law needs the certainty of a viable future. But in June of 1992, the law was up for renewal for the first time. Owners needed to know that the program would continue, unchanged, for a period sufficient enough to complete the legalization of their buildings. A brief extension of the law would only encourage owners to procrastinate until they could be assured that the state legislature intended to renew the Loft Law. The City of New York would be similarly discouraged from enforcing the law if its continued existence were in doubt.
With the help of pro-tenant politicians, the art community, and a coalition of rent-controlled and rent-stabilized tenant groups, LMLT organized a massive lobbying effort in a fight to renew the Loft Law before its "sunset" date of expiration on June 21, 1992. But unbeknownst to LMLT, the Republican-led State Senate intended to use loft tenants as guinea pigs to test a brinkmanship strategy. Its function as a dress rehearsal for forcing changes in rent stabilization and rent control laws, scheduled to expire in June 1993, would become evident a year later.
Although the original purpose of the Loft Law was just beginning to be fully realized in June 1992, the State Senate refused to renew it without substantial pro-landlord changes and threatened to allow the law to expire unless the State Assembly and then-Governor Mario Cuomo yielded to property owners' demands. By using a tactic of letting the law come within minutes of expiration and then passing a series of 24- and 48-hour short-term extenders--each time making additional demands on behalf of the owners, the Senate managed to successfully extract numerous concessions from the pro-tenant Assembly.
The pressure of these one- and two-day extenders took a terrible toll. Many loft tenants were forced to spend long days and nights away from their families and jobs in order to maintain a lobbying presence in Albany. Some tenants panicked and prepared to leave their homes. Unfortunately, those loft tenants with severe circumstances--health or financial problems, pressing family or work obligations--suffered the most while their lives were held in limbo. At last, on June 30, 1992, the battle to renew the Loft Law was won--but not without exacting a heavy price.
Although LMLT had lobbied for a six-year renewal, the Loft Law clock was reset with a four-year expiration date that would only continue to protect tenants through June 30, 1996.
Owners who had not complied with the requirements for achieving legalization during the previous ten years, received no penalty for having broken the 1982 law by failing to adhere to its timetable. All loft landlords would be "deemed in compliance" with the law if they merely completed the first step towards legalizing their buildings before October 1992; completion of this first step (filing an Alteration Application) had been required nine years earlier, in March 1983, by the original Loft Law.
Owners were provided with permanent rent increases--before completing the legalization process--to be implemented at three interim stages of code compliance. These "good faith" rent awards were designed as incentives for owners to obey the law and follow its new timetable, which required them, yet again, to obtain a residential C of O within three years.
Additional stipulations allowed for broader parameters in which owners could obtain extensions of time to meet the requirements of the legalization schedule; loopholes by which owner fines could be waived; and more lenient provisions for exemption from the Loft Law altogether due to owner claims of hardship.
Much has changed in lower Manhattan since 1965, when pioneering artists began establishing loft colonies there. Today, these artistic communities encompass the working homes of thousands of resident painters, sculptors, video and filmmakers, dancers, musicians, actors, and writers along with hundreds of art galleries and numerous museums and theaters, which together have earned New York its reputation as the international capital of the art world. SoHo and TriBeCa, in particular, have become reknowned worldwide and attract exuberant tourism. In 1992 alone, nineteen million arts-motivated tourists contributed 1.387 billion dollars to the economy of New York City, according to a 1993 study conducted by the Port Authority of NY and NJ/Alliance for the Arts. Since 1982, the Loft Law has been a mainstay for the stability of the city's art centers and has enabled the arts industry and ancillary small businesses to thrive and succeed at being one of the most vibrant economic sectors of the state.
Loft neighborhoods like SoHo, TriBeCa, and the colonies in Brooklyn--where vacant manufacturing buildings were renovated by artists without city or state subsidies--currently serve as models for community development and subsequent economic revival. The 1996 Executive Summary of The Regional Plan Association of New York specifically targets the arts for serious consideration, calling for "creative planning, zoning, and expansion of arts and cultural activities that foster the kind of desirable mixed-use communities that will attract jobs and residents to centers."
Urban planning initiatives have already begun to emulate the success of the loft districts whose high concentrations of artist living/work quarters are protected by the 1982 Loft Law. A revival project in the economically stagnant Financial District of lower Manhattan, where large, rental living/work spaces are being introduced, is a local example. Others include an artist colony upstate in Peekskill, New York, that is creating living/work quarters in an attempt to revitalize a blighted main street. Another is a project named WALDO in Jersey City, where efforts are currently underway to install an arts community in its depressed downtown area with the explicit intension of enticing artists by offering affordable rental studios in which they can live and work.
In 1982, the New York State Legislature recognized the achievements of the city's artist pioneers by passing the Loft Law. In 1996, however, the political climate in Albany had changed under newly elected Governor George Pataki, shifting away from protecting tenants to favoring real estate owners. Concurrently, the New York City Loft Board, under Mayor Rudolph Giuliani-appointed Chairman David Lande, had repeatedly undercut tenant protections as set forth in the Loft Law by ammending its regulations in a blatant exhibition of bias towards commercial property owners.
By mid-1996, one third of the approximately eight hundred mixed-use buildings covered under the law had completed legalization and obtained a Certificate of Occupancy, while 96% were in the process of moving through the code compliance pipeline. An overall average of the 10,000 tenants protected by the law had lived and worked in their lofts for eighteen years. The cultural importance and the economic benefits of sustaining safe, affordable housing for artists was validated by thriving tourism and the resultant revenues and jobs evidenced in the city's loft communities. The Loft Law was clearly working.
Nevertheless, property owners could smell the opportunity brewing with their political advantage in Albany as LMLT prepared to mount another monumental campaign to lobby for the law's renewal before its "sunset" date of expiration on June 30, 1996. It would prove to be their most hard-fought battle to date.
If either side could have looked into a crystal ball, one message would have forecast the cardinal lesson that would be indelibly learned by the end of their struggle: IT AIN'T OVER TILL THE FAT LADY SINGS!
TO BE POSTED SOON
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