By definition, an IMD building lacks a residential certificate of occupancy. The objective of the Loft Law is to bring buildings illegally converted to residential use into compliance with state and city housing laws relating to health, safety, and fire protection. In large part, the requirements of these laws are met when the owner performs construction work on its building to bring the building up to the City's residential code, and obtains a revised certificate of occupancy that allows residential use of the building.
To obtain the necessary residential certificate of occupancy, an owner must follow the requirements set forth in the Building Code and the Loft Law. The owner must file an alteration application with the Department of Buildings (DOB), obtain an approved alteration permit from DOB, and then perform the work described in the permit to the satisfaction of DOB's inspectors. Finally, the owner must apply for and be issued a residential certificate of occupancy.
Owners of IMDs must take the usual steps that any building owner has to take to obtain a residential certificate of occupancy when converting from commercial or manufacturing use to residential use. In addition, prior to obtaining a building permit, owners of IMD must go through a special mediation process that involves the residential tenants in the planning process. This process, called the "Narrative Statement Process," allows a residential tenant to object to an owner's legalization plans if the planned work would unreasonably interfere with the tenant's use of his loft unit, and to file alternate plans. An owner cannot obtain a building permit from DOB unless it has received certification from the Loft Board that the Narrative Statement process is complete.
The Loft Law sets forth deadlines by which an owner must reach each of these stages in the legalization process.
The Loft Board's rules allow owners to apply for an extension of these deadlines. Generally, extensions are only granted if the owner has shown that it made good faith efforts to meet the deadline and was unable to comply with the law for reasons beyond its control.
An owner's failure to meet a statutory deadline does not relieve it of responsibility for completing legalization. The Loft Board prosecutes owners for failing to meet these deadlines, and the Board often imposes substantial fines upon owners who have failed to comply with the law.
The Loft Board's addition to the typical DOB conversion procedure is the "occupant review of plans process," commonly known as the narrative statement process. The Board has concluded that this process, which involves the tenants in the details of legalization, is necessary because the process of legalization generally involves substantial construction and may necessitate basic changes to individual units. Within 15 days of filing an alteration application at DOB, the owner of an IMD must provide the tenants and the Board with a "narrative statement," describing the work to be performed and explaining why it is necessary; the Board's rules provide details as to what a narrative statement must contain. Following the filing, Loft Board staff will schedule an informal conference with the owner and tenants. The purposes of the conference are to help the tenants understand the details of the owner's legalization plan and, when necessary, to mediate disputes arising from the proposal.
If the parties reach an agreement on the details of the legalization plan, the Board will provide certification that the narrative statement process has been completed; DOB will not issue a work permit without this certification. If, however, an agreement cannot be reached on some aspect or aspects of the legalization plan, the tenants may choose to file an alternate legalization plan with DOB.
If DOB approves the tenants' plan, the Board may choose to institute a proceeding to determine which plans should become the basis for the actual work to be performed. The issue in such proceedings is whether the owner's plan would "unreasonably interfere" with the tenants' use of their units. Following resolution of an unreasonable interference proceeding, the Board may then certify that the narrative statement process has been completed.