Illegal Lofts in New York City: Have the Equities Been Balanced Jay Facciolo
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Fordham Urban Law Journal Volume 14 | Number 3 Article 3 1986 Illegal Lofts in New York City: Have the Equities Been Balanced Jay Facciolo Follow this and additional works at: https://ir.lawnet.fordham.edu/ulj Part of the Housing Law Commons Recommended Citation Jay Facciolo, Illegal Lofts ni New York City: Have the Equities Been Balanced, 14 Fordham Urb. L.J. 559 (1986). Available at: https://ir.lawnet.fordham.edu/ulj/vol14/iss3/3 This Article is brought to you for free and open access by FLASH: The orF dham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Urban Law Journal by an authorized editor of FLASH: The orF dham Law Archive of Scholarship and History. For more information, please contact [email protected]. Illegal Lofts in New York City: Have the Equities Been Balanced Cover Page Footnote Columbia University School of Law, J.D., 1983; Associated with the law firm of Kramer, Levin, Nessen, Kamin & Frankel, New York, N.Y This article is available in Fordham Urban Law Journal: https://ir.lawnet.fordham.edu/ulj/vol14/iss3/3 ILLEGAL LOFTS IN NEW YORK CITY: HAVE THE EQUITIES BEEN BALANCED? Jay Facciolo* I. Introduction In New York City today, tens of thousands of people,' primarily tenants, are illegally2 occupying lofts.3 These tenants have signed commercial leases, 4 often long-term leases at rents far below the current market rate. The changing economics of loft buildings5 has led to serious conflicts between landlords and tenants. Landlords have sought to evict tenants before their leases expire, 6 refused to renew their leases7 or demanded higher rental rates upon renewal.' Tenants have withheld rent for extended periods. 9 These conflicts have been taken to the courts, 0 and legislation recently enacted in New York State attempts to resolve these issues for at least some tenants and landlords." At the same time, New York City has been concerned about this tenant-landlord conflict, as well as the overall impact on the city's economy of both legal and illegal conversions of loft buildings from manufacturing or commercial to residential use.' 2 The city has taken an active role in seeking statutory solutions to these problems, but it is yet unclear whether the city's efforts 3 have been successful. A. The Loft Building A "loft" building is a multi-story nonresidential building, usually with more than one tenant.' 4 In Manhattan, loft buildings were built * Columbia University School of Law, J.D., 1983; Associated with the law firm of Kramer, Levin, Nessen, Kamin & Frankel, New York, N.Y. 1. See infra note 65. 2. See infra notes 61, 62 and accompanying text. 3. See infra notes 14-25 and accompanying text. 4. See infra notes 156-58 and accompanying text. 5. See infra notes 58, 59 and accompanying text. 6. See, e.g., infra notes 211-23 and accompanying text. 7. See, e.g., infra note 290. 8. Id. 9. See, e.g., infra notes 191-205 and accompanying text. 10. See infra notes 149-329 and accompanying text. 11. See infra notes 366-420 and accompanying text. 12. See infra note 39 and accompanying text. 13. See infra note 427 and accompanying text. 14. L. Kahn, The Loft Building in the Central Business District of Manhattan FORDHAM URBAN LA W JOURNAL [Vol. XIV in three waves: 1870 through 1900, 1900 through World War I, and 1920 through 1931.'1 In 1934, a real property inventory showed that 39.3% of all rentable loft building floor space existing at that time had been constructed prior to 1895.16 By 1957, the percentage of pre-1895 loft buildings had dwindled to 2.9% 7 due to demolition of older loft buildings."8 These pre-1895 lofts were built south of 14th Street, concentrating in areas near Broadway, Canal Street, and the Hudson and East Rivers.' 9 After 1900, industry, led by the apparel manufacturers, began to spread north of 14th Street.20 In Manhattan, 32.8% of the loft space in 1934 had been constructed between 1895 and 1914.2 ' Loft construction then slowed down until the 1920's, at which time a final burst of loft construction occurred, almost all of which was north of 14th Street.2 The changes in the structural characteristics of loft buildings co- incided approximately with the three waves of their construction. The typical pre-1895 loft building is "five stories high, situated on a lot 25' x 100,' with the building covering 90 percent of the land." 23 1-6 (June 1963) (Pratt Institute planning thesis) [hereinafter cited as Kahn]. A loft building has few or no interior bearing walls. "As such, it is basically a hollow structural shell with reinforced floors and a maximum of rentable floor space. It is not unusual, particularly on the upper floors, to have an entire floor with no partitions at all, except possibly for a small office." Id. at 51. The term "loft" is commonly used to refer both to the individual floors in such a building and to the entire building itself. Where a distinction is necessary, this article will use "loft living unit" to refer to a single floor or part of a floor converted to a residence and "loft building" to refer to an entire building. 15. Id.at 12-27. 16. Id. at 34. 17. Id. at 32. 18. Id. at 33. 19. Id. at 16, 28-30. 20. Id. at 22-25. Other industries have moved at other times. The textile whole- salers established themselves in the late 1800's in the Worth Street area. I. Wagner, A Policy Approach for Loft Living in Lower Manhattan 40-42 (October 1975) (the Graduate School of Architecture and Planning, Columbia University, M.S. thesis) [hereinafter cited as Wagner]. In the 1950's, the vast majority of these firms relocated to mid-Manhattan. Id. at 47. 21. Kahn, supra note 14, at 34. This had increased to 40.8% by 1957. Id. at 32. Clearly, the pre-1895 buildings suffered the most demolition. Id. at 33. 22. Id. at 35. As of 1934, 20.6% of floor area had been constructed during the 1920's. Id. at 34. This grew to 40% by 1957. Id. at 32. 23. C. RAPKIN, SOUTH HOUSTON INDUSTRIAL AREA 144 (1963) [hereinafter cited as RAPKIN]. These older loft buildings are of ordinary wood-joist construction, with the floors of rough wood or cement ... [and] are carried by brick-bearing walls. Where the span between the walls is too big, the floors are supported in the center by cast-iron columns, wedged between floor and ceiling, and not actually an integral part of the structure. Kahn, supra note 14, at 51; see also RAPKIN, supra, at 145-47. 1986] ILLEGAL LOFTS 561 During the second phase, which occurred after 1895, the supporting cast-iron columns used in larger loft buildings were made more uniform in thickness and thereby became safer.2 Finally, the third phase, which occurred prior to World War I, saw the appearance of a more modern form of loft, built on a steel frame with an 25 enclosed stairway and concrete floors. B. History of Loft Conversions 26 In the late 1950's and early 1960's, artists began to move into smaller loft buildings2 that manufacturers were beginning to vacate. 28 24. RAPKIN, supra note 23, at 145. Before 1895, the foundry process produced hollow columns of uneven thickness which often resulted in insufficient thickness at some points on the columns. Id. This lack of uniformity can be particularly dangerous in fires. Id. 25. Kahn, supra note 14, at 51; RAPKIN, supra note 23, at 145. 26. A conversion occurs when a loft building or loft floor once used for commercial and/or industrial purposes is remodeled or "converted" to accommodate a resident. The usual lack of any interior walls in a loft, see Kahn supra note 14, makes for easy conversions and unusual space arrangements. Id. at 52. At the minimum, a conversion involves installing a full bathroom and a kitchen; at a maximum, a loft floor may be converted into luxury housing. See S. ZUKIN, LOFT LrVING: CULTURE AND CAPITAL IN URBAN CHANGE 61-62 (1982) [hereinafter cited as ZUKIN]. 27. D. Diether, SoHo and NoHo Background 1 (Nov. 1975) (memorandum from the Zoning Chairman, Manhattan Borough President's Community Board No. 2) [hereinafter cited as Diether]. Artists began to move from Greenwich Village as they started doing artwork on a larger scale and as rents began to rise. Id. Artists first moved into SoHo (the area on the west central side of Manhattan and south of Houston Street) and into NoHo (the area in the center of Manhattan and north of Houston Street). Id.; Kahn, supra note 14, at 72 (noting that artists had moved into loft buildings around the Bowery, from Houston to 8th Street). As rents in SoHo increased, artists began to move into loft buildings in Tribeca (the triangle below Canal Street on the west side of Manhattan). Wagner, supra note 20, at 11. 28. Diether, supra note 27, at 1. As industries became more mechanized, the small floors of many loft buildings did not give manufacturers a large enough contiguous area to carry out efficient manufacturing. Id.; see also K. FORD, HOUSING POLICY AND THE URBAN MIDDLE CLASS 3 (1978) (estimating that any building with an area per floor of under 7,500 square feet is unlikely to attract a new business) [hereinafter cited as FORD]; RAPKIN, supra note 23, at 64-79; J. Baifinson, Regulating Loft Conversion in New York City: Better Late than Never 12 (Spring 1981) (Princeton University senior thesis) [hereinafter cited as Bailinson].