1995 Rental Housing Study
New York State Assembly

Assemblyman Vito J. Lopez
Standing Committee on Housing

V. Loft Housing

A. The origin of the Loft Law

The steady decline of manufacturing in New York City after World War II resulted in the growing vacancy of loft buildings which had been constructed to house small manufacturers, particularly in Manhattan below 59th Street and in Brooklyn along the waterfront. While City planners and others debated various proposals for redevelopment of these areas, an unregulated, unplanned solution was at work as more and more loft space was rented for residential use even though the buildings were not in code compliance for such use. The 'pioneers' moving in were mostly artists and innovators in the fields of communication and entertainment who were looking for space in which to both live and work. Thus, buildings that were created for the once thriving manufacturing sector of New York City's economy have been adapted (without public expense) for use by a major component of New York's present and future economy -- arts, communication and entertainment.

By the late 1970's, however, loft living became so fashionable that the supply of vacant space was quickly absorbed and landlords began evicting remaining manufacturing and residential tenants in order to cash in on the boom. The City and State governments then acted to bring some order to what had become a chaotic situation and to balance the equities of competing interests. The City modified its zoning regulations to encourage residential conversion without penalizing viable manufacturing uses. The State amended the Multiple Dwelling Law to ensure that converted buildings were made safe for residential use.

The "Loft Law," as the changes to the Multiple Dwelling Law have become known, was adopted by the Legislature in 1982. It required that converted buildings be brought up to code for residential use but gave owners an exemption from existing law which would have prevented them from collecting rent while the buildings were being made code compliant. The Loft Law also permitted almost all of the cost of legalization to be passed on to residential tenants as rent increases paid over ten or fifteen years. Residential tenants, in turn, have the right to continued occupancy and regulated rents. In 1992 the Legislature extended the Loft Law to 1996.

B. The Present Situation

There can be no question that the City and State's actions to stabilize loft areas have been a success. Whole new neighborhoods have been created, and affordable living and work space has been maintained. Meanwhile, remaining manufacturers have not been priced out of the market. Most importantly, converted buildings are gradually being made safe for residential use.

Some 800 buildings, containing approximately 5,000 units, come under the Loft Law. About 85% of these are in Manhattan while the remainder are in Brooklyn. About one-third of the buildings have been brought in to compliance with the building code, another third have completed the planning process and are ready to be legalized, and the remainder are in the planning stages.

C. The Future of Lofts

As manufacturing continues to decline in New York City, more and more space becomes available for other uses A large amount of loft space is being utilized as office space, and proposals have been made to allow residential use in areas which are currently zoned for manufacturing. The City and State have an opportunity to plan for the next wave of residential conversions and can learn from the experience of the 1970's and 1980's to allow for more gradual, less disruptive change. The Loft Law sunsets in 1996; its steady progress in bringing about the legalization of the buildings covered and its stabilizing effect on loft communities argue for its renewal.