U.S. Supreme Court declines review of NYC SoHo loft conversion fee

The U.S. Supreme Court has declined to review a zoning dispute in New York City, leaving in place a ruling that upholds a substantial fee for converting certain lofts in the SoHo and NoHo neighborhoods.

The dispute involves properties legally classified as ‘Joint Living-Work Quarters for Artists.’ Under a 2021 rezoning, owners can convert these units to unrestricted residential use, but must pay a fee of $100 per square foot into an arts fund. For some owners, this cost can exceed $250,000.

Property owners challenged the fee, arguing it violated the Fifth Amendment by requiring payment for the use of private property. While a lower appellate court initially found the fee lacked a sufficient connection to the conversions, the New York Court of Appeals reversed that decision. The state's highest court reasoned that owners did not possess an existing property right to unrestricted residential conversion. By declining the appeal, the Supreme Court leaves the local conversion framework and the city's fee intact, though the refusal to hear the case does not constitute an endorsement of the state court's legal reasoning.