THE NYC ZONING RESOLUTION WHICH ALLOWS “JOINT LIVING-WORK QUARTERS FOR ARTISTS” TO BE CONVERTED TO UNRESTRICTED RESIDENTIAL USE UPON PAYMENT OF A $100 PER-SQUARE-FOOT FEE DOES NOT VIOLATE THE “TAKINGS CLAUSE” OF THE US CONSTITUTION (CT APP).

The Court of Appeals, reversing the Appellate Division, in a full-fledged opinion by Judge Rivera, over a concurrence and a dissent. determined that a New York City Zoning Resolution which allows “Joint Living-Work Quarters for Artists” units in SoHo and NoHo to be converted to unrestricted residential use upon payment of $100 per square foot did not violate the Takings Clause in the Fifth Amendment to the US Constitution. The 1971 “Joint Living-Work Quarters for Artists” (JLWQA) designation allowed certified artists to affordably reside and work in buildings formally used for manufacturing which were not zoned for residential use. Over the decades the areas have been gentrified and became predominately occupied by non-artists. The challenged 2021 zoning resolution essentially allows any JLWQA unit to be converted to unrestricted residential unit by paying a fee. The petitioners argued the fee violates the Takings Clause:

We conclude that petitioners do not have a compensable property interest within the meaning of the Takings Clause, as the United States Supreme Court has interpreted it, and that the fee therefore does not constitute a taking. The Takings Clause protects property owners against exploitative governmental conduct that seeks to take property without paying for it … . The newly granted opportunity to transform the essential nature of a restricted JLWQA unit into a different, unrestricted interest is not in itself a property interest. Rather, it is the restricted JLWQA unit itself, and the concomitant bundle of property rights resulting from the City’s designation as such, that constitutes the property that the government cannot take without just compensation. The creation of an optional pathway to convert to unrestricted residential use upon payment of the fee has not extinguished or diminished petitioners’ property rights in their JLWQA units. The City gains no interest in the units upon conversion, and even if petitioners held a constitutionally protected property interest in converting their property, the rezoning plan does not subject petitioners to any governmental coercion to transfer property that they would otherwise retain.

Furthermore, a typical Takings Clause case involves the government’s physical acquisition or use of private land without compensation, or its monetary exaction from a property owner in lieu of a transfer of their private property interest. By contrast, a standalone monetary fee such as the one in this case does not implicate the Takings Clause merely because it is levied upon a property owner. Matter of Coalition for Fairness in Soho & Noho, Inc. v City of New York, 2026 NY Slip Op 00076, CtApp 1-13-26