How Much Will the New Loft Law Protect Tenants?

How Much Will the New Loft Law Protect Tenants?

March 2012

In June 2010, the state Legislature passed an expanded version of the 1982 Loft Law, It gave anyone living in an illegal loft in New York City the ability to apply for coverage and be protected from unscrupulous landlords, and it also provided a route for responsible landlords to legalize their illegally converted commercial properties. 

The new law is intended to protect the estimated 15,000–20,000 people currently living in illegal lofts. Yet the way it is put into effect will determine their fate. Landlords, arguing that many loft tenants are paying way below market rate and that they need additional income to start the renovations, are demanding that the Loft Board give them an additional increase, “Interim Rent Guidelines,” beyond the “6-8-6,” the increases of 6, 8, and 6 percent they will receive when they complete stages of bringing their buildings up to code. 

At a meeting last November, the nine-member Loft Board was unable to agree on how much that additional increase should be, but none of its members advocated a rent freeze. When Buildings Commissioner Robert LiMandri suggested a 3.1 percent increase, tenant representative Chuck Delaney said, “Cut that in half, and I’ll sign it right now.” 

In testimony before the board, Met Council on Housing said a one-shot rent increase was not justified. “For decades many loft spaces, including in illegally converted buildings in Brooklyn and Queens, have rented at a premium, not a discount,” it said. “Outer-borough lofts covered by the recent expansion of the Loft Law include a high percentage of units that were advertised through traditional channels, and marketed and represented as legal dwelling units.” Met Council also said many tenants who contacted them did not know their apartments were illegal. 

Following the Met Council testimony, tenants and advocacy groups began a letter-writing campaign that urged the Loft Board to adopt a draft rule with no additional increases.


From SoHo to Dumbo to Bushwick

Unlike the 1982 law, which had to be renewed every two years, the new Loft Law is permanent. However, loft dwellers who want to be covered will have to apply within six months after the Loft Board adopts its rules. 

The 1982 law was a response to conditions in SoHo, where artists had moved into former manufacturing lofts and used them as both homes and studios. Yet after their presence gave the neighborhood cachet, they began to get forced out, because their living situations were illegal and they had none of the rights of an ordinary residential tenant.

In the early 2000s, as the real-estate market in the outer boroughs heated up, landlords realized that converting their manufacturing buildings to residential use could bring a huge windfall. They could get residential rents for these illegal conversions; they could often rely on prime tenants to do the work for them, and they wouldn’t need to provide much maintenance. They could jack up rents once leases expired, and there was only minimal legal recourse for tenants.

In fact, because the conversions were done illegally, landlords could get tenants out any time they wished. So they kicked out tenants who had transformed their neighborhoods, and brought in more affluent people attracted to the revitalized area. Tenants who tried to fight to hold landlords responsible for their actions or to defend themselves from evictions found no quarter in Brooklyn courts. The results can be seen in areas like DUMBO, where by 2010, only a handful of tenants remained clinging to their lofts.

The new loft law extends the protection of the 1982 law to any commercial or manufacturing buildings where at least three units were occupied for residential purposes for 12 consecutive months in 2008 and 2009. It requires owners to bring them into compliance with safety and fire-protection standards and to obtain a certificate of occupancy as a residential building. The lofts would then be covered by rent stabilization. As incentive to bring their buildings up to code, landlords will be able to raise rents in three steps, by 6, 8, and 6 percent, as steps in the legalization process are completed.

To qualify, loft tenants have to meet many criteria. They have to live in a building without a residential certificate of occupancy that was formerly used for manufacturing or commercial purposes. That building cannot be in an “Industrial Business Zone” except for those in Williamsburg, Greenpoint, and Long Island City. It must not have contained a commercial use considered incompatible with residential use on June 21, 2010. The tenants must live in a unit that was occupied residentially for 12 consecutive months in 2008 and 2009.  They should have lived there on June 21, 2010, or had their landlord accept their tenancy by giving them a lease or taking rent directly. Their unit can be entered without going through someone else’s space, is at least 550 square feet, is not in a basement, and has at least one window overlooking a street or legal courtyard. 

As the real-estate market revived in 2010, landlords began to take advantage of the cards they were holding, especially in Brooklyn. They could easily increase rents high enough to force the current tenant out and then flip the place over to a new tenant. That would increase their profit, and the new tenant would not have been in the building long enough to qualify for coverage under the law. 

On Columbus Day weekend in 2010, the landlord of 360 Jefferson St. in Bushwick, seeking to convert the building into an illegal nightclub, had the Department of  Buildings order all the residential tenants to leave. He had a work crew enter the building and pour cement into the drains of the bathroom sinks and tubs, rendering them useless. With the help of the police at the 83rd Precinct, Assemblymember Vito Lopez, and a few city officials, the tenants were allowed back in. They are now trying to get their homes covered under the loft law.


Loft Tenants Organize

Many tenants have been reluctant to enter the legalization process. Many are already paying market rates, and most feared eviction and didn’t want to rock the boat or incur any further rent increases. The New York City Loft Tenants was formed in the fall of 2011, by tenants who had attended Loft Board public hearings over the summer. They felt that the board had no incentive to work hard on helping people or doing any outreach, and seemed to have little credible knowledge about the real situation of people who lived in lofts. Although they had a few allies on the board, it seemed that the panel’s agenda was not related to the needs of carrying out the Loft Law. 

Since the passage of the law, many rules have been written that are clearly detrimental to tenants. Another group, the North Brooklyn Loft Tenants Association, said in a statement that the board has been insensitive to tenants’ substantial rent liability, has attempted to remove their right to participate in the legalization, and has written rules that virtually force tenants to retain a lawyer and a architect just to apply for their rights under the Loft Law. 

The New York City Loft Tenants has objected to the Loft Board’s “incompatible use” rule. These would disqualify some “mixed use” buildings where manufacturing still takes place from being legalized for residential use on health and safety grounds. The group says people have lived with these elements of manufacturing for sometimes decades without a health incident.

The group is also advocating amending the “6-8-6 increases” to ensure that rents do not become unaffordable. Additionally, it wants the Loft Board to prohibit landlords from applying for the 6-8-6 rent increases if their application states that “no work” is needed to get a certificate of occupancy.

Jett Drolette is a Brooklyn loft tenant and NYCLT member.