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Manhattan Loft Guy

Nov. 30, 2010 - how are Soho artist-in-residence articles like the Richter Scale in California?


when is The Big One?
I’ve been continuing to consult and reflect about the conundrum reflected in the November 12 New York Times article Suddenly, SoHo Heeds Law Limiting Lofts to Artists and my quick-but-long post in response later that day, did the NY Times just write the obituary for the Soho real estate market?.

One thing that people say about this over and over is that “we’ve been here before”, meaning that there have been many times before when public media attention focused on the anomaly that nearly all Soho lofts must be live/work space for certified “artists” yet there just aren’t that many resident artists in Soho (and proportionately fewer and fewer each year). It makes me wonder if articles like Christine Haughney’s are like brief (low impact) earthquakes in Southern California: they remind people that the world is unstable, but when most people realize that the vibrations have stopped they go on with life as before.

A few Cassandras or Chicken Littles (is there a blogger named LA Earthquake Guy?) wonder if The System is about to fail, but most people behave as though they have simply forgotten about the risk soon enough.

small tremor in August
I will start in the not-too-distant past, a mere tangent from a piece by Candace Taylor from The Real Deal three months ago, Top 10 Real Estate ‘deal kilers’ (the link is to an Inman reprint, since I can’t get a direct TRD link to work):

For years, these [A.I.R. /  Soho zoning] rules weren't enforced, but a recent crackdown by city officials combined with buyers' increased vigilance is now causing many transactions to run aground. Baisley said she is currently working on two multimillion-dollar deals that have run into trouble because of zoning problems.


That Baisley is attorney Margaret D. Baisley, often referred to as one of the most experienced and knowledgeable attorneys about Soho residential lofts, one whom I have often heard referred to as a source in the past for advice to the effect that ‘the city didn’t enforce this’.

what’s shakin’, back 3 years
Jhoanna Robledo pretty much nailed this three years ago in a much more generally read publication than The Real Deal or Inman News, with a New York Magazine title that seems eerily familiar, Loft Clauses / What happens if the city steps up enforcement of Soho’s artist-in-residence laws?, featuring a line that is also eerily familiar:

as more co-ops bring their properties up to code or convert to condominiums, enforcement appears to be stepping up, leaving some owners scrambling to comply—Quick, find a craftsy roommate!—and real-estate types wringing their hands.


The city had something not very comforting to say to Robledo in July 2007:

Apparently, there are more than a few co-ops under Department of Buildings scrutiny for AIR-related violations. The DOB’s position? “The law has not changed, nor has our enforcement of the law,” says spokesperson Kate Lindquist. “We continue to enforce the AIR regulations as we always have.”


Although I suppose you could read that as comforting, if you believed that “as we always have” really meant “as we always have not”....

there was a recorded tremor in 2003
The New York Times had a long article on June 8, 2003 with a headline that (after I looked up one word) I realized is a brilliant way to frame this issue, In a Changed SoHo, Legal Pentimento (the bold is mine, of course):

Now that the area [Soho and Noho] has been transformed into one of the city's most sophisticated and costly neighborhoods, many artists have long since migrated to less expensive surroundings. But the regulation, written into the zoning code, and a vestigial remnant of the board -- whose membership is kept secret -- remain.

While officials concede that the regulation is rarely enforced, its effects live on.

Apparently nothing happened when the 3 relevant city agencies got together:

Commissioners of the three agencies that share responsibility for the regulation have begun conversations about its future.
 

''The law was created with the best intentions at a particular moment in the neighborhood's history,'' said Kate D. Levin, the commissioner of the Department of Cultural Affairs, which grants the artists' certifications. ''We are aware that market forces and the reality of SoHo are not in sync with the provisions of the law. This agency has been in discussions with the Department of City Planning and the Department of Buildings to see how we can most effectively address the situation to protect the neighborhood, and we intend to talk to arts groups and the community board as well. ''We intend to do the right thing,'' Commissioner Levin said, ''and if doing the right thing shifts, then it is government's responsibility to shift.''


I suspect nothing happened then because the local politicians could not find a way to turn back the clock in quite the way one wanted to then (my bold, toward the end, per usual):

City Councilman Alan Gerson, who represents the area, has taken up the cause. ''The purpose of the program remains valid, although the administration is flawed,'' he said. ''A good land use zoning plan could serve the purpose and replace artists' certification, but we shouldn't do away with it until we put something else in its place.''

Mr. Gerson has remedies in mind. ''First, we should do a thorough survey of what is there,'' he said. ''I think we need to expand the definition of the arts to include not only traditional sculpture and fine painting but new media, architecture and design.''

''We also have the challenge of recreating the conditions that allowed new artists to come in and build up the community,'' he said. ''There are several underdeveloped areas and vacant lots that are the site of proposed development. I believe that any new development should have an arts component, whether that means reserving a certain percentage for affordable housing for artists or creating new collective art space where they can work.''


Does this quote from the city look to you like a wink-and-a-nod?

But the passage of time and the inevitable turnover in residents has made the regulation ''virtually unenforceable,'' according to Ilyse Fink, a spokeswoman for the Department of Buildings.


If so, that would have been a very minor tremor.

one more winking tremor, from 2001
New York Magazine has been here before, more than once. There was a small note published in the real estate section of the June 18, 2001 New York Magazine, Soho Low Blow, that set the scene, described an evolutionary process, and even suggested a helpful response from the bureaucracy (helpfully bolded):

"What happened were these cases where someone just had to sell, and begged the board to allow a nonartist to buy their place," says ... a SoHo broker since 1975. "And then, over time, half the building became nonartists." Then, the mid-nineties condo boom eliminated the co-op board gatekeeper.

   

The law hasn't gone away, though: "Every nonartist living in a co-op has to sign a waiver," says [another agent]. "This exempts the building from any responsibility if the city decides to enforce the law."

   

Not that that's likely: "We're complaint-driven. If we received a complaint, we'd inspect," says a Department of Buildings spokesman. Even then, "we wouldn't vacate unless there was a serious safety risk."

   

And while some buildings, like 31 Mercer, remain unsullied, sources say others, like 80-100 Prince, 117-121 Prince, and 451 Broome, have loosened up. Even 167-169 Spring (pictured), long considered a paragon of virtue, just started breaking down, says one person familiar with the situation.


what has changed?
I read this succession of articles as culminating as of two weeks ago in a different place than the earlier ‘tremors’. No more official concessions (explicit, or winks), plus more frequent and specific citations to actual problems in 2010. Taylor’s August TRD piece spoke of “many transactions [that had] run aground” and attorney Baisley claimed then to have had two.

Haughney’s November 12 piece on the front friggin’ page of the New York Times claimed specific consequences:

But over the last year or so, something odd began to occur: people started paying attention to the rule.
 

Apartments, even those in buildings with the prestige of famous residents, have languished on the market. Banks began withholding mortgages. Co-op boards began ordering residents to apply to the city for certification as artists.

And last year, for the first time anyone could remember, the city rejected as many applications as it approved, in a cryptic process that mystifies those who have gone through it.


With that premise, this (typical?) official quote now seems less comforting:

“There has been no change in department policy toward enforcing artist-in-residence requirements,” said Carly Sullivan, a Buildings Department spokeswoman.


has anything changed?
The only way to tell if something has changed is to see if more people get ground up in the gears here: more sales scuttled by non-artist buyers walking away; more residents or coops having trouble re-financing; more Certificate of Occupancy issues.

Perhaps this too shall pass. Perhaps the post-November 12 kerfluffle will evaporate the way Jhoanna Robeldo’s 2007 question seems to have been answered (hint: negatively): What happens if the city steps up enforcement of Soho’s artist-in-residence laws?

One smart developer who is active in Soho has a theory about something that has changed, however. Given the corruption scandals that (yet again) have plagued the Department of Buildings, there may be more pressure on DoB inspectors and examiners to not let things slide when (as with manufacturing zoning and artist certifications) there are clear rules on the books. If we are going to see a change in city enforcement, the fact that DoB employees figure they won’t be criticized for applying the rules (and may be criticized if they don’t) might well be an explanation.

If, as it turns out at some future point, looking back, that things have changed.

watch out for Soho closings since November 12
It takes a while for deeds to be filed, but I will look out for Soho closings to see if there is a slowdown in late 2010, or more specifically after the November 12 front page bomb. It will be a while before meaningful data emerges, if it does at all, so don’t hold your breath.

But I wlll be back to this topic.

[UPDATE Dec 1: this is just too weird... at the time I was preparing this Richter-themed post yesterday, there was a magnitude 3.9 earthquake offshore, 80 miles south of Montauk, Long Island and 110 miles east of NJ.

and ... be sure to read all the way down to the comments on my Nov 12 post; there's an interesting conversation going on there]

© Sandy Mattingly 2010

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Sandy Mattingly is Manhattan Loft Guy; now with The Corcoran Group (http://corcoran.com/ ; but see the disclaimer at the bottom of the page), he can be reached most easily at Sandy@ManhattanLoftGuy.com or 917.902.2491, and followed on Twitter @ManhattnLoftGuy (note "mis-spelling"). After 7+ years, the blog has moved. Links here on RealTown will work for the foreseeable future, but new posts (and all the old content) has migrated to ManhattanLoftGuy.com.

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