New York City Wants $250,000 From SoHo Artists Just To Stay in Their Homes

The blocks south of Houston Street (SoHo) in New York City were a ghost town in the 1960s. Factories had shuttered, warehouses were empty, and landlords struggled to fill vast cast-iron lofts. Then artists moved in, hauling easels and welding equipment into open spaces that no one else wanted. They patched holes, rebuilt staircases, and improvised kitchens where factory sinks once stood.

Artists gave SoHo its soul, turning a derelict manufacturing space into the world’s most famous arts district. Now those same pioneers and their successors are being told to pay the city $250,000 if they want to stay in the neighborhood. The residents have sued to stop that, and their lawsuit is on its way to the state’s highest court.

The dispute dates back to 1971, when the state created a special category of housing, Joint Living-Work Quarters for Artists, to legitimize what was already happening while still reserving the district primarily for industry. To live in these lofts, you had to be a city-certified artist.

The certification system was always peculiar, and it eventually broke down. The city never certified artists in any meaningful number and was lackadaisical in enforcement. By 1983, only 30 percent of the lofts were occupied by certified artists. Eventually, families inherited these homes, or non-certified artists bought them. They became a community—still creative, but not certified as such.

In 2021, City Hall decided to “fix” this legal limbo by rezoning SoHo and NoHo (“north of Houston Street”). Officials opened the neighborhoods to general residential use but told longtime residents that they could stay only if they paid for a “conversion permit.” The cost was $100 per square foot—about $250,000 for the average loft.

The money flows into an “Arts Fund” to bankroll cultural projects across Lower Manhattan. As Councilmember Christopher Marte put it in an amicus brief, the city is targeting a small group of homeowners to subsidize programs far beyond their community.

Certified artists are nearly extinct—the last records show the city issued just one certification in 2018—so residents can’t realistically sell or pass down their homes without paying the fee. Even children inheriting their parents’ lofts will be forced to cough up hundreds of thousands of dollars if they want to hold onto them.

The people affected aren’t faceless property owners; they’re New Yorkers, many of them artists, even if not officially certified as such. They are people like Zigi Ben-Haim, a painter and sculptor whose family fled Iraq for a better life and who bartered his artwork for supplies to make his space in SoHo livable. Ben-Haim and many others literally rebuilt unsafe buildings with their hands, only to be told decades later that they must pay six figures to keep their homes.

A group of these residents decided to take action and sue the city, and they have a powerful legal doctrine in their corner. As the Supreme Court has recognized, the Fifth Amendment prohibits local governments from putting onerous conditions on land use permits unless the demand is related and proportional to the harm the person’s land use causes. Yet the city is demanding a six-figure payment in exchange for a permit to “convert” lofts to residential use, even though those lofts have been living quarters for decades. As New York’s appellate court stated while ruling in the residents’ favor, “the conversion of units imposes no increased costs to the artistic community.”

Far from harm mitigation, the conversion fee looks much more like simple extortion. Loft residents are targeted not because their conversions are problematic, but because the city knows it can secure revenues from necessary permits and funnel them into a general Arts Fund.

The residents’ lawsuit heads to the state’s highest court for argument this November. Though the case centers around New York, the outcome could shape property rights nationwide. Should the residents prevail in one of the most influential state courts in America, that ruling would help protect residents and business owners across the country from extortionate governmental demands.

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