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 cate

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