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.

Leaving the Loft Board's Jurisdiction? Three Things To Do ASAP

Congratulations! You have obtained a residential Certificate of Occupancy for your IMD building and the Loft Board has issued a final rent order. It's time to celebrate!

However, don't forget to have your lawyer do three things as soon as possible:
(1) offer the first rent-stabilized lease to the IMD tenants,
(2) register the building with the Department of Housing Preservation and Development (DHPD), and, after receiving a registration identification number from DHPD,
(3) register with the Division of Housing and Community Renewal (DHCR).

Taking these steps as soon as possible is in your best interest as a building owner. If you fail to register with DHCR and DHPD, then you will not be able to maintain a nonpayment proceeding or a holdover proceeding against your IMD tenant. You may say: "What's the hurry? If my IMD tenant stops paying rent, then I'll register with DHPD and DHCR and then start my case." The problem is that it takes three to four weeks for DHPD to process an IMD owner's first registration statement. As a result, your case will be delayed for three or four weeks.

There are many form leases available for purchase. What form lease do you offer to your tenants? Unfortunately, there is no form lease available for purchase which is tailor-made for rent-stabilized tenants who were formerly IMD (loft law) tenants. In the absence of a tailor-made lease, you can use the Real Estate Board of New York (REBNY) form rent-stabilized lease. If you offer this lease to your tenants - or any other form lease available for purchase - don't be surprised if your tenants' lawyer objects and demands certain changes to the form lease! For example, most tenant attorneys demand that a "rider" to the lease reflect the fact that the tenant has the right to sell improvements which the tenant made to the tenant's loft. If your tenants' attorney objects to the lease you have offered, be sure to get your lawyer involved.

The Loft Board's October 15, 2009 Meeting

At the October 15, 2009 meeting, Executive Director Lanny Alexander said that Chuck Delaney was correct: the Open Meetings Law requires that the Loft Board's minutes must be published within two weeks of the meeting. At the present time, the minutes generally contain a detailed recitation of what the various members say at each meeting. Ms. Alexander suggested that in order to meet the two-week deadline, staff should omit these details. She reminded everyone that the meetings are tape-recorded and members of the public could always ask to hear the tape recording. The Board voted to adopt Ms. Alexander's suggesting of streamlining the minutes.

Stay tuned to this blog: it may include "details" which will be omitted from the Loft Board's minutes.

Prior to the Board's October 15, 2009, Martha Cruz, Director of Hearings, prepared a proposed order concerning the Fogel case, regarding 93-99 Commercial Street. The proposed order was mailed to the parties.

Generally speaking, it has been the Loft Board's practice over the years to "close the record" after the proposed order is issued. In other words, if a party is offended by the Board's proposed order, and the party or his/her attorney writes a last-minute letter of protest, perhaps raising new issues, the Loft Board's staff ignores it, and refuses to distribute the late submission to the members of the Loft Board.

In the late afternoon or early evening of Friday October 9, 2009, the Loft Board received a submission from an attorney for one of the parties to the Fogel case. Martha Cruz and Lanny Alexander read the submission, decided that it raised significant legal issues, and, on the day before the Board's meeting, withdrew the case from the Board's calendar of cases for consideration on October 15, 2009. Delaney correctly noted the Loft Board's past practice of closing the record, and asked staff to report to the Loft Board, at the next meeting, on "the process that currently exists."

Practice pointer to all litigants before the Loft Board and their attorneys:
You will receive the Loft Board's proposed order days before the Board's scheduled meeting - sometimes even one day before! Your attorney should be ready to jump into action, write a letter of protest, raise new issues and hand-deliver the submission to the Loft Board. The worst that could happen is that the Loft Board could say no, we won't accept your last-minute submission. You'll never know unless you try.

Delaney to Loft Board: Minutes of Loft Board's Meeting Must Be Made Public in Two Weeks

At the Loft Board's September 17, 2009 Meeting, Chuck Delaney (tenant's representative) told the Loft Board that minutes of the Loft Board's meeting must be made available to the public within two weeks of the Board's meeting. At the present time, the Board does not make the minutes public until they are approved by the Loft Board. For example, the minutes of the May meeting are approved at the June meeting, and made public a short time thereafter. However, the minutes of the June meeting are not approved by the Loft Board until its September meeting, a three-month delay. Lanny Alexander, the Executive Director of the Loft Board, responding to Delaney, said she would look into this issue and report to the Board at the next meeting.


The new Loft Board Chairman Robert D. Limandri (Commissioner of the Department of Buildings) presided over his first Loft Board meeting on September 17, 2009.


At the same meeting, the Loft Board announced that Beverley Miller, Director of Legalization, left the Loft Board (a division of the Department of Buildings) to work for another division of the Department of Buildings.


Ms. Miller was employed at the Loft Board for 25 years. Her first assignment at the Loft Board was public information officer, a post now held by Michelle Shephard. Her most recent position at the Loft Board required her to preside at narrative statement conferences, attended by landlords, tenants, their architects and attorneys. She will be sorely missed by all.


Martha Cruz presented an interesting summary calendar case regarding 178 Stanton Street. Unfortunately, since, as a member of the public, I am not permitted to read proposed orders before the Loft Board's meeting, I can only give you the broad outlines. Apparently, the parties in that case arrived at a stipulation of settlement of some kind. The Loft Board therefore disposed of the case, without approving or disapproving of the stipulation of settlement. Chuck Delaney voiced the opinion that the stipulation is egregious, contrary to public policy and the Loft Board should not approve of the stipulation. Delaney voted "no" but the remainder of the Loft Board voted to adopt the proposed order prepared by Martha Cruz.


Although the Loft Board did not interfere with the parties' settlement in the Stanton Street case, Delaney's comments serve as a reminder to all landlords and tenants: even if you work out a deal, and settle your dispute before the Loft Board or the Office of Administrative Trials and Hearings, the Loft Board may refuse to honor your settlement agreement.