(a) Definition of Reasonable and Necessary Action.
(1) Reasonable and necessary action to obtain a certificate of occupancy, as used in § 284(1) of the MDL, means deliberate, diligent, and consistent action from the beginning of Art. 7-C coverage through the issuance of a final residential certificate of occupancy for the IMD Building, or the issuance of a final certificate of occupancy for the residential portions of the IMD Building. Failure to take reasonable and necessary action to obtain a residential certificate of occupancy issued pursuant to MDL § 301 is a violation of this section.
(i) Factors to consider. In deciding whether an Owner or Responsible Party has been taking all reasonable and necessary actions to obtain a certificate of occupancy pursuant to subdivision (a) above, the Loft Board or its staff may consider but not be limited to the following factors:
(A) Whether the Owner or Responsible Party has filed an Alteration Application with the DOB.
(B) Whether the Owner or Responsible Party has timely cleared all DOB objections to obtain the building permit for the alteration.
(C) Whether the Owner or Responsible Party has timely filed a Narrative Statement and Legalization Plan.
(D) Whether the Owner or Responsible Party timely obtained a building permit after issuance of the Loft Board certification pursuant to 29 RCNY § 2-01(d)(2)(xii).
(E) Whether the building permit for the alteration that the Loft Board certified pursuant to 29 RCNY § 2-01(d)(2)(xii) is in effect.
(F) Whether any other current permit to further the legalization of the residential spaces is in effect.
(G) Whether the Owner or Responsible Party has timely engaged a contractor to perform the work necessary to obtain a certificate of occupancy.
(H) Whether there has been any stoppage of work due to reasons within the Owner's or Responsible Party's control.
(I) Whether the Owner or Responsible Party has timely cleared all DOB objections and violations as required for obtaining a certificate of occupancy.
(J) Whether the Owner or Responsible Party has timely scheduled all DOB inspections required for obtaining a certificate of occupancy.
(ii) Quarterly reports about legalization projects.
(A) Any IMD Owner or Responsible Party who has not been issued a final residential certificate of occupancy issued pursuant to MDL § 301 for the IMD units must file with the Loft Board a quarterly report relating to the legalization projects in the Building on the approved Loft Board form, as available on the Loft Board's website or at the offices of the Loft Board. In the case of IMD Buildings owned by a cooperative or a condominium, the cooperative or condominium board is responsible for the filing of the quarterly report. The report is due on the first Business Day of January, April, July and October. The Loft Board or its staff may require the Owner or Responsible Party to file additional reports.
(B) The report must be signed by the Owner or Responsible Party of the IMD Building and a registered architect or professional engineer.
(C) The information provided in the report may be used as evidence in connection with a Loft Board determination as to whether the Owner or Responsible Party has exercised all reasonable and necessary action to obtain a final residential certificate of occupancy.
(D) The Executive Director may issue a fine in accordance with 29 RCNY § 2-11.1 for failure to file the legalization report for each report not filed on the first Business Day of each quarter.
(E) The filing of a false statement in a report may result in fines in accordance with 29 RCNY § 2-11.1 for each false statement in a report.
(2) An Owner may not delegate its obligation to exercise reasonable and necessary action to obtain a final residential certificate of occupancy for the IMD units.
(b) Failure to Take all Reasonable and Necessary Action toward Obtaining a Final Residential Certificate of Occupancy.
(1) Inspections.
(i) Staff employed or assigned to the Loft Board is authorized to conduct inspections at the direction of the Loft Board or Executive Director to determine if the Owner or Responsible Party is taking all reasonable and necessary action to obtain a final residential certificate of occupancy issued pursuant to MDL § 301. If an inspection report is prepared, the report is considered a record kept in the regular course of the Loft Board's business and is deemed prima facie proof of the facts contained therein.
(ii) Such inspections may be used by the Loft Board in determining when a penalty for failure to take all reasonable and necessary action toward obtaining a certificate of occupancy, pursuant to a hearing determination by an OATH Administrative Law Judge, or an ECB hearing officer, abates.
(2) Enforcement Proceedings. At any point prior to the issuance of the final residential certificate of occupancy issued pursuant to MDL § 301, the Loft Board may initiate an enforcement proceeding against an Owner or Responsible Party for failure to take all reasonable and necessary action to obtain a final residential certificate of occupancy even where the next legalization deadline for the Owner or Responsible Party to meet, as set forth in 29 RCNY §§ 2-01 et seq. or § 284(1) of the MDL, has not passed. The Owner or Responsible Party has the right to present to the Loft Board or its representative, within thirty (30) days of delivery of the notice of proceeding by hand, or thirty-five (35) days of the posting of the notice by mail, a response that includes information as to why that notice should be withdrawn or information regarding mitigating factors the Owner or Responsible Party wishes the Loft Board to consider in connection with its determination of the amount of the fine to impose. If applicable, the Owner or Responsible Party may file an Application for an extension of the code compliance deadlines pursuant to 29 RCNY § 2-01(b).
(3) Hearings. Hearings will be conducted by OATH Administrative Law Judges or ECB hearing officers, who will determine whether the Owner or Responsible Party has made a diligent, consistent and good faith effort to obtain a residential certificate of occupancy for the IMD as required by Art. 7-C of the MDL. Hearings conducted by OATH must be conducted in accordance with the rules and procedures governing OATH so long as they do not conflict with the Loft Board rules. Hearings conducted by an ECB hearing officer must be conducted following the procedures of ECB hearings.
When the OATH Administrative Law Judge or ECB hearing officer issues a finding that the Owner or Responsible Party has not exercised all reasonable and necessary action to obtain a final residential certificate of occupancy, he or she shall also recommend a fine in accordance with 29 RCNY § 2-11.1. Such fine accrues thirty (30) days from the date of delivery by hand or thirty-five (35) days from posting by mail of the notice of an enforcement proceeding, and may continue to accrue until the Owner or Responsible Party demonstrates compliance with this section.
(4) Defenses. To defend a Loft Board proceeding for failure to exercise all reasonable and necessary action to achieve compliance, an Owner or Responsible Party must show deliberate, diligent and consistent action to achieve a final residential certificate of occupancy and must document efforts to obtain the residential certificate of occupancy and any impediments to compliance outside of the Owner's or Responsible Party's control.
(5) Mitigating Factors For Fines. Mitigating factors that may be considered regarding the amount of the fine imposed on the Owner or Responsible Party may include, but are not limited to, the following:
(i) Within thirty (30) days after the date of the notice, the Owner or Responsible Party has begun to take reasonable and necessary action to obtain a certificate of occupancy; or
(ii) The Owner's or Responsible Party's failure to take reasonable and necessary action towards obtaining a certificate of occupancy were for reasons beyond the Owner's or Responsible Party's control. Examples of such circumstances beyond the Owner's or Responsible Party's control include, but are not limited to, a requirement for a certificate of appropriateness for modification of a landmarked building, a need to obtain a variance from the Board of Standards and Appeals, or the denial of reasonable access to an IMD unit.
(6) Evidence of violation not requiring hearing.
(i) Failure to file an Alteration Application to convert the IMD units to residential units within the later of:
(A) Three (3) Months of the effective date of this rule, or
(B) Six (6) Months from receipt of a Loft Board Order granting IMD status to a Building or the issuance of an IMD registration number to the Owner or Responsible Party, or
(C) Six (6) Months from a finding of Art. 7-C coverage by a court of competent jurisdiction constitutes a rebuttable presumption that the Owner or Responsible Party is not engaged in taking reasonable and necessary action to obtain a residential certificate of occupancy or a certificate of occupancy for the residential portions of the Building.
(ii) Failure to file a Narrative Statement pursuant to 29 RCNY § 2-01(d)(2)(vi)(A) constitutes a rebuttable presumption that the Owner is not engaged in reasonable and necessary action to obtain a residential certificate of occupancy or a certificate of occupancy for the residential portions of the Building.
(iii) Where the Loft Board has issued certification pursuant to 29 RCNY § 2-01(d)(2)(xi), and an Owner or Responsible Party has failed to obtain an Alteration Permit within three (3) Months from the date of such certification or from the effective date of this rule, whichever is later, such failure to obtain the permit constitutes a rebuttable presumption that the Owner or Responsible Party is not engaged in taking reasonable and necessary action to obtain a residential certificate of occupancy or a certificate of occupancy for the residential portions of the Building.
(iv) Where an Alteration Permit has been issued in connection with the legalization of the residential portions of an IMD Building, the failure to maintain the permit in effect until the issuance of a final residential certificate of occupancy or a certificate of occupancy for the residential portions of the Building constitutes a rebuttable presumption that the Owner or Responsible Party is not engaged in reasonable and necessary action to obtain a residential certificate of occupancy or a certificate of occupancy for the residential portions of the Building.
(v) Failure to maintain a temporary certificate of occupancy for the residential portions of the IMD Building, if one was previously issued, constitutes a rebuttable presumption that the Owner or Responsible Party is not engaged in reasonable and necessary action to obtain a residential certificate of occupancy.
(7) Upon finding a violation pursuant to paragraph (6) of this subdivision, the Loft Board's Executive Director may issue a notice to the Owner or Responsible Party stating an intent to find the Owner or Responsible Party in violation of its obligation to exercise all reasonable and necessary action. The Loft Board's Executive Director may issue a fine in accordance with 29 RCNY § 2-11.1.
The Owner or Responsible Party has the right to present to the Loft Board's Executive Director or his or her representative within thirty (30) days of delivery of the notice by hand, or thirty-five (35) days of the posting of the notice by mail, a response that includes information as to why the notice should be withdrawn and/or information regarding mitigating factors pursuant to paragraph (5) of this subdivision the Owner or Responsible Party wishes to be considered in connection with Executive Director's determination of the amount of the fine to be imposed.
Following the receipt of a timely response from the Owner or Responsible Party, the Executive Director may either withdraw the notice, or may impose a fine in accordance with 29 RCNY § 2-11.1. Unless the Owner or Responsible Party first demonstrates compliance with this section, such fine begins to accrue thirty (30) days after delivery by hand or thirty-five (35) days after the posting of the notice by mail and continues to accrue until the Owner or Responsible Party demonstrates compliance with this section. If necessary, the Owner or Responsible Party may file an Application for an extension of the code compliance deadlines, pursuant to 29 RCNY § 2-01(b).
(c) Reporting Obstacles in Legalization Process. If an owner encounters an obstacle in the legalization process outside of its control, the owner must state that obstacle in the monthly reports filed with the Loft Board. Additionally, the owner must notify the Loft Board in writing within fourteen calendar days of the date the owner knew or reasonably should have known of the obstacle, or if necessary, the owner shall file an application for an extension of the code compliance deadlines pursuant to 29 RCNY § 2-01(b). An owner's failure to timely notify the Loft Board of an obstacle in the legalization process outside of the owner's control shall create a rebuttable presumption that there was no obstacle to the legalization process that was outside of the owner's control.
(d) Access to IMD Units. The tenant's failure to provide access is not deemed outside of the owner's control if the owner has not within a reasonable time filed an access application pursuant to 29 RCNY § 2-01(g)(3).
(e) Subsequent Enforcement Proceedings. Where the OATH Administrative Law Judge or ECB hearing officer issues a decision finding that the owner has failed to exercise all reasonable and necessary action to obtain a certificate of occupancy, such decision does not bar the OATH Administrative Law Judge or ECB hearing officer from subsequently issuing another such decision after three months.
(Amended City Record 3/1/2023, eff. 3/31/2023)