SoHo-NoHo Rezoning Litigation – No Go

Earlier this month, a State Supreme Court judge filed her decision which upheld New York City’s 2021 rezoning of SoHo-NoHo against the challenge brought by the SoHo NoHo Coalition, on Constitutional grounds.  More specifically, the judge upheld the requirement that non-artists living in residential units in SoHo-NoHo that were designated as Joint Live-Work Quarters for Artists (JLWQA) must pay a fee of $100 per square foot into a City-sponsored “arts fund” in order to legalize their units for residential occupancy by non-artists.*

The Court dismissed all of the Coalition’s arguments under the US and New York State Constitutions and ruled that this required payment does not impair private contracts, nor take private property without just compensation, nor deprive property owners of equal protection of the law.  (Although the attorney for the Coalition promptly filed a Notice of Appeal, this writer is skeptical of the Coalition’s chances to succeed.).

However, the Court acknowledged that the original zoning legislation, which was enacted in December 2021, in the last days of the DeBlasio Administration, and the last days of numerous term-limited City Council Members, had already been watered down, or at least delayed, by the State Legislature’s redefinition of the term “artist” and by a partial settlement between the Coalition and the City.  The Court’s decision did not affect those subsequent changes to the law.

The post-2021 changes were twofold:

First, a few months after the rezoning was enacted by the City, the State legislature amended the definition of “artist” under the Multiple Dwelling Law (Section 276).  An “artist” was previously defined as someone who works in fine arts, or performing or creative arts, and is certified as an “artist” by the City Department of Cultural Affairs or the State Council on the Arts.  The 2022 Amendment added that any non-artist who was a permanent occupant of a JLWQA unit as of December 15, 2021, was deemed to meet the requirements of being an “artist.”  Thus, the Amendment legalized the existing status quo as of December 15, 2021, the effective date of the rezoning.

Second, the parties to the litigation entered into a partial Settlement in June 2023.  This made clear, in the wake of the State’s new definition of an “artist,” that any person who occupied a JWLQA unit as of December 15, 2021, would be deemed to occupy it lawfully, and that person could also sell the unit to a non-artist without making a required payment of $100 per square foot.  But rezoning requirements would continue to apply to any person who purchased a JWLQA unit after 12/15/2021, and her resale presumably would be subject to the arts fund payment requirements.

Thus, current occupants of JWLQA units in SoHo and NoHo have been granted immunity from the implementation of the $100-per-square-foot payment to legalize their units, and also a reprieve from the threat of violations being imposed for illegal occupancy, with possible huge fines.  But any purchaser of such a unit after 12/5/21, will be in jeopardy in connection with her ability to resell the unit or even obtain a bank loan on it.  One can hope that a future City or State legislature will change this requirement to allow a less painful path to legalization of these units.

 

* For example, an artist’s loft can easily occupy 3,000 square feet, and they often range between 5,000 and 10,000 square feet.  At $100 per square foot, the required payment would be $300,000 for the 3,000 square foot loft, $500,000 for the 5,000 square foot loft, and $1,000,000 for the 10,000 square foot loft.

 

This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Counsel Michael D. Utevsky who counsels clients in areas of corporate operations and management, real estate and infrastructure, reorganization and bankruptcy, and trust and estates.