Chelsea Now – Momentum Building to Confront Construction Permit Fraud

By Eileen Stukane, July 15

New York state and city elected officials are responding to the activism of the newly-created Community & Residents Protection Working Group (CRP), which this year has been alerting Chelsea residents to widespread building fraud that has previously gone unnoticed.

At meetings with representatives of city agencies and Community Board 4 (CB4), the CRP began to flush out owners, landlords and developers who received NYC Department of Buildings (DOB) permits for construction by routinely lying on their DOB Form PW1, section 26 applications, stating that occupied buildings were unoccupied — a statement which freed them from instituting required Tenant Protection Plans, and making conditions unlivable in order to pressure occupants to leave.

The CRP revealed that 80 occupied buildings in Chelsea were construction sites permitted through falsified applications. Seeing legal permits posted, residents of those buildings did not think they had any recourse. As research deepened, it also became apparent that this fraudulent situation is a citywide concern. The CRP’s findings ignited a call for action, which shows strong signs of being heard — especially by the DOB, which is receiving word from community leaders, and has its own reforms in the works. Although no specific corrective measures are in place, the drive for change has begun.

On June 30, 2015 five elected officials — Manhattan Borough President Gale Brewer, NYC Councilmember Corey Johnson, NY State Assemblymember Richard Gottfried, NY State Senator Brad Hoylman and U.S. Representative Jerrold Nadler — signed a letter addressed to DOB Commissioner Richard (Rick) Chandler, requesting a meeting with him and his appropriate staff to discuss the CRP’s findings and to “find a satisfactory way for the agencies to work together to stop the harassment and dangerous conditions facing many tenants today.”

Assemblymember Gottfried’s office, as point person for the signers, is in the process of following up on the request for a meeting.

The CRP has suggested that one possible remedy is greater communication between city and state agencies, especially between the DOB and the NY State Department of Homes and Community Renewal (DHCR), since the DHCR holds every building’s occupancy and rent regulation status — information the DOB does not have.

In the letter, the signers also noted that the DHCR has a Memo of Understanding (MOU) with the NYC Departments of Finance (DOF) and Housing Preservation and Development (HPD) “to permit access to confidential registration records so DOF can approve SCRIE [Senior Citizen Rent Increase Exemption] and DRIE [Disability Rent Increase Exemption] applications, and HPD can monitor various housing regulations” and added, “We hope that this MOU can be amended to add your agency to perform this vital check.”

Assemblymember Gottfried told Chelsea Now: “My office has received many calls from constituents with horrible stories about landlords doing major construction work in buildings while populated by residential tenants. It can make life hell. Often services like gas, heat, hot water, and elevators are shut off, and tenants are forced to live in unsanitary and unsafe conditions with dust, holes in walls and floors, and noise at all hours. When tenants complain they are told to move out, which is exactly what the landlord wants. Landlords get away with lying on the DOB permit applications, claiming there are no tenants in the building, and not filing a Tenant Protection Plan. This is all part of the pattern of landlord harassment to force tenants out and make way for sky-high prices. The DOB needs to crack down, make landlords tell the truth and obey the law, and prosecute landlords who don’t.”

Simultaneous to the elected officials’ letter to DOB Commissioner Chandler, a letter was sent from CB4’s Housing Health and Human Services Committee (HHSC) to BP Brewer and Councilmember Johnson, with copies to eight other elected officials as well as DOB Commissioner Chandler, DHCR Commissioner Darryl Towns and HPD Commissioner Vicki Been.

The CB4 letter also called for extensive reforms. Included in the letter were lists of more than 50 DOB projects that had false filings and non-compliant Tenant Protection Plans, and the request that “DOB conduct a file audit of the DOB applications for the projects identified.” The letter, signed by CB4 Chair Christine Berthet and CB4 HHSC co-chairs Joe Restuccia and Barbara Davis, also asked the elected officials “for assistance to prevent the further loss of affordable rent regulated apartments in our district due to the lack of enforcement by DOB of existing safeguards.”

Chelsea Now reported that the CRP hoped attention would be paid to the issue of falsified applications at DOB’s Build Safe Conference on April 27 (“CRP Pressing For Promised Building Fraud Action,” May 7, 2015).The issue did not appear to receive direct seminar time, but shortly after the Conference, on May 14, Commissioner Chandler issued a groundbreaking plan for reforming the DOB: “Building One City: A Blueprint For Fundamental Transformation at the New York City Department of Buildings.”

Within the Blueprint are plans for change that include a new Industry Code of Conduct, Enhanced Legal Action Against Bad Actors, and the creation of the Risk Management Office (RMO) to analyze extensive amounts of DOB data to determine where vulnerabilities exist and to recommend solutions.

Reducing falsification during the filing process is also a goal. The DOB is working toward becoming a fully electronic system. At present, only about 30 percent of the PW1 filings are done online, with the rest still filled out by hand, according to Alex Schnell, DOB’s press secretary.

When speaking with Chelsea Now, Reynaldo Cabrera, DOB’s Risk Management Officer since the start of the RMO in January 2015, noted that just last year alone there were over 140,000 building permits issued. The DOB is aware of the issue of falsified applications and the RMO is working with Timothy Hogan, DOB’s deputy commissioner of enforcement to deal with falsifiers. “Whether having privileges by the department revoked, or licenses revoked, whether we refer them (landlords) to the state department for licensing issues, or in certain circumstances, make referrals for criminal prosecution, we’re looking at the range of penalties,” says Cabrera, who adds, “Now the issue with information, we’re looking at the data that we currently collect, and how we can better leverage that data. Within the Blueprint, we talk about what we’re doing on the technology side, how we can better upgrade. We’re relying on legacy systems so the first step that we’re working on internally is to have full electronic filing that will allow us to have more front end accountability.” Cabrera also notes that the DOB after upgrading, will be able to be more effective in data-sharing with other agencies, but even now, “We’ve been working with HPD on nuisance construction, illegal conversions and, more recently, we’ve started working with Con Ed.”

On another front, the work of the Tenant Harassment Prevention Task Force, which has connected the NY State Attorney General’s Office, the HPD, the DOB, the DHCR and the NYC Department of Health and Mental Hygiene this year, has resulted in the first arrest of an NYC landlord. Brooklyn landlord Daniel Melamed and his engineer Pirooz Soltanizadeh have been indicted on charges of unlawful eviction and endangering the welfare of a six-year-old child. Melamed had stated in his DOB filings that his Crown Heights building was vacant when some of the units were occupied, a number of them by rent regulated tenants.

After the indictments were brought by Attorney General Eric Schneiderman in June, Mayor Bill de Blasio said, “Our Task Force is sending a loud message to predatory landlords: you will be caught, and the consequences will be severe.”

Although these latest arrests are a sign of action, Bill Borock, who as president of the Council of Chelsea Block Associations is also involved in the CRP, would like to see more forward momentum. “If Commissioner Chandler agrees to meet with elected officials to talk about CRP’s issues, that would be progress. But saying the DOB is going to meet and actually meeting are not the same thing. Saying you will do something is very different than doing it, and in this situation, enforcement is key.”