Why 550 Square Feet?

     The June 2010 Loft Law does not cover units which are less than 550 square feet.  The 550 square foot requirement is irrational because:

• the June 1982 Loft Law did not have a minimum-square-footage requirement;
• most legal studios in NYC are smaller than 550 square feet; and
• NYC desperately needs smaller - and less expensive - housing units.

     The smaller housing units are needed primarily because single adults now make up almost one-half of NYC's population.  (According to the 2010 census, 32% of households in NYC were single-person households).  Yet only 1.5% of NYC's rent housing is a studio or one-bedroom apartment.

     In an effort to address this problem, Mayor Bloomberg launched a competition to design and construct the city's first micro-unit apartment building.  The winning team was announced in a mayoral press release dated January 22, 2013:

• Monadnock Development LLC,
• Actors Fund Housing Development Corporation, and
• nARCHITECTS.

     The building will consist of 55 micro-units which will measure between 250 and 370 square feet.

     Once again, why must a loft consist of 550 square feet in order to be covered by the 2010 Loft Law?  Hopefully, either a tenant - or more likely a building owner - negatively affected by this requirement will challenge it in Court.

Why You Should Obtain A C of O for Your Building

On Thursday June 6, 2012, the Court of Appeals of the State of New York (the State’s highest Court) decided that an IMD tenant who has not paid her rent since 2003 could not be compelled to pay and could not be evicted for nonpayment.  Chazon, LLC v. Margaret Maugenest.  The reason: the landlord was not in compliance with the code compliance timetable set forth in Multiple Dwelling Law Section 284 and the landlord’s application to the Loft Board for an extension of time had been denied.  As a result, Maugenest gets to keep $60,000 in unpaid rent and her landlord has lost its ability to collect it.

Are you in compliance with the code compliance timetable?  The current law provides that owners of buildings, covered by the 1982 Loft Law, are required to obtain a residential Certificate of Occupancy (“C of O”) on or before July 2, 2012.  If your tenants are currently paying their rent, without regard to the legalization status of the building, they may not continue to do so after hearing about the Maugenest decision, which received wide publicity. 

If you do not think you will meet the July 2, 2012 deadline, you should file an application with the Loft Board for an extension of time prior to the deadline.  If the Loft Board grants the application, your deadline will be extended until a date certain, and then your IMD tenants will be required to pay rent up to and including the extension date.

In the past, the Loft Law was set to expire on a date certain, and each time the law was extended, the legislature also moved back the code compliance deadlines.  However, all of that changed with the 2010 statute, which does not ever expire.  There is little reason to expect that the legislature will ever re-visit the Loft Law in order to give owners a break and extend the code compliance deadlines for buildings covered under the 1982 law.  Furthermore, owners who do not obtain a C of O may be hit with a Loft Board enforcement proceeding for penalties of $1,000.00 per day for failure to take all necessary and reasonable steps to obtain a C of O.

The Newly Expanded Loft Law - Who is Covered

The definition of an interim multiple dwelling (a building covered by the Loft Law) under the "old" Loft Law is that it is a building:

1. located in a city of more than one million persons (e.g., New York City);
2. which was at any time occupied for manufacturing, commercial or warehouse purposes;
3. which lacks a Certificate of Occupancy issued pursuant to Multiple Dwelling Law Section 301 (e.g., a residential certificate of occupancy);
4. was occupied by three or more families living independently of one another during a certain period of time (generally referred to as the window period).

As you probably know, the owner of an interim multiple dwelling (IMD) building is obligated to obtain a residential certificate of occupancy pursuant to Multiple Dwelling Law Section 301. Covered tenants enjoy a regulated rent and protection against eviction.

The New York State legislature recently expanded the definition of the Loft Law by changing the window period to twelve consecutive months during the period January 1, 2008 to December 31, 2009. It has been reported that this change may include 300 new interim multiple dwelling (IMD) buildings.

The new Loft Law also provides that a building can qualify as an IMD if only two or more families live independently of each other in the area bounded by West 27th Street at the north, West 24th Street at the south, 11th Avenue at the west and 10th Avenue at the east.

Certain buildings and certain types of units are excluded from Loft Law coverage.

Buildings located in New York City industrial business zones are excluded from Loft Law coverage, except for the following industrial business zones:

• Williamsburg-Greenpoint,
• North Brooklyn, and
• parts of the Long Island City industrial business zone.

For more information about industrial business zones, visit the following web site: www.nyc.gov/html/imb.

If an occupant of the building is engaging in certain activities which are incompatible with residential use in the same building, the building may be excluded from Loft Law coverage. These activities fall into use groups 15 through 18 of the New York City Zoning Resolution. However, the use must be "actively and currently pursued" as of the effective date of the new Loft Law, and the Loft Board must determine, in rules and regulations which have not yet been drafted, that the use is "inherently incompatible with residential use in the same building."

The new Loft Law also excludes:

• units located in a basement or cellar,
• units that do not have at least one entrance which does not require passing through another unit,
• units that do not have at least one window opening onto a street, lawful yard or court, and
• units that are less than 500 square feet.

There is a deadline for owners wishing to register their buildings or tenants wishing to file coverage applications with the Loft Board: six months from the date the Loft Board adopts rules and regulations implementing the new Loft Law.

My next blog will deal with legalization deadlines set by the new Loft Law, and penalties for failure to timely take steps toward legalization.

Governor Signed Loft Law, But It Is Being Amended

At about 11:30 pm on Monday June 21, 2010, the Governor signed the Loft Law, creating a new window period: twelve consecutive months from January 1, 2008 to December 31, 2009.

Mayor Bloomberg, however, urged the Governor to veto the Loft Law, unless it excluded buildings located in New York City's 16 industrial business zones. The powers-that-be arrived at a compromise which excludes buildings in 13 industrial business zones from Loft Law coverage, but includes buildings in the following 3 industrial business zones: Maspeth, Greenpoint-Williamsburg and North Brooklyn.

The current version of the bill (A11524) was reported out of the housing committee and referred to the codes committee today. It provides that a building cannot be considered an "interim multiple dwelling" (IMD) unless it was occupied by at least three or more families living independently from one another during the window period. In addition, the following units would be excluded from coverage:

• units located in a basement or cellar,
• units without an entrance that requires one to pass through another unit,
• units that do not have at least one window opening onto a street or lawful yard or court,
• units that are less than 550 square feet,
• units in buildings which contain a use "actively and currently pursued" in use groups 15 through 18 of the zoning resolution AND which, according to Loft Board rule or regulation, is "inherently incompatible with residential use in the same building."

The proposal to exclude such units indicates, to this blogger, that someone in Albany is actually aware of some of the difficult legalization problems which the Loft Board has faced over the past 28 years.

Additional amendments will be made to the Loft Law this week.

Guess What's On The Governor's Desk

The Loft Law will be renewed as soon as the Governor signs the bill which landed on his desk yesterday.

The proposed renewal statute (Assembly Bill A05667, Senate Bill S5881) would broaden the definition of an interim multiple dwelling (IMD) in a way that would include many additional commercial, manufacturing and warehouse buildings. Currently, the Loft Law provides that such a building must be residentially occupied by three or more separate individuals or families (in three or more separate units) during the "window period" of April 1, 1980 to December 1, 1981. The new law would provide that such a building must be residentially occupied by two or more individuals or families (in two or more separate units) for 12 consecutive months during the window period of January 1, 2008 to December 31, 2009.

The proposed law would cover the new generation of loft tenants currently living in neighborhoods such as Williamsburg, Greenpoint and Long Island City.

The proposed law also grants an extension of time to owners of buildings currently under the Loft Board's jurisdiction (about 300 buildings). These owners must comply with Multiple Dwelling Law Article 7-B on or before May 1, 2012 (extended from May 1, 2010) and obtain a residential Certificate of Occupancy by May 31, 2012 (extended from May 31, 2010).

Who Will the Loft Board Tag First?

The Loft Board will send out information about the Loft Board's new $1,000-per-day penalty regulation and registration renewal invoices to all IMD owners next week. At today's Loft Board meeting, the Executive Director said that, after owners receive this mailing, the Loft Board will serve official notices threatening a $1,000-per-day penalty upon fifty IMD owners. The fifty buildings will fall into one of these three categories:
(1) the owner received Loft Board certification of completion of the narrative statement process but failed to thereafter obtain a building permit;
(2) the building permit is expired; and
(3) the building obtained a temporary certificate of occupancy (TCO) but the TCO expired.

In order to avoid getting "tagged," owners should "take all necessary and reasonable steps" without any further delay!

Loft Board Adopts Tough New Regulation

The Loft Board just adopted a regulation that might as well be entitled "New York on $1,000 per day." That's the Loft Board's price tag for going nowhere with your efforts to legalize your IMD building.

The Loft Board's new regulation (adopted on April 15, 2010, effective on May 21, 2010) promises to impose penalties of $1,000.00 per day upon all IMD owners who fail to take "all necessary and reasonable action" to obtain a residential Certificate of Occupancy.

Beginning June 1st, all IMD owners who have not obtained a Certificate of Occupancy must file a monthly report with the Loft Board - or suffer a penalty of $1,000.00 for failure to do so. In addition, anything you say can and will be used against you in future Loft Board proceedings to impose penalties.

Penalties can be imposed without a hearing for certain types of infractions, such as failure to file a monthly report with the Loft Board.

This is only a very brief summary of the regulations. The regulations - which should be read by every IMD owner, IMD architect and IMD attorney - are posted on the Loft Board's web site.