Memorandum of Opposition Regarding Denial of Building Permits Where Outstanding Charges Are Owed to the City (Intro 1133)

BILL: Intro 1133
SUBJECT: Denial of building permits where outstanding charges are owed to the city.
DATE: March 23, 2017
SPONSORS: James Vacca, Deborah L. Rose, Margaret S. Chin, Eric A. Ulrich

 

The Real Estate Board of New York (“REBNY”) represents over 17,000 property owners, developers, managers, brokers, and other real estate professionals in New York City. The Building Owners and Managers Association of Greater New York (“BOMA/NY”) represents more than 750 owners, property managers, and building professionals who either own or manage 400 million square feet of commercial space in NYC, and is the largest local within BOMA International, a federation of 90 US associations and 19 international affiliates that own and operate approximately 10.5 billion square feet of office space in the United States.

REBNY and BOMA oppose Intro No 1133 because it may discourage applicants from applying for building permits.

Intro No. 1133 proposes to prohibit the Department of Buildings (DoB) from issuing permits if $25,000 or more is owed to the City for the property in question. Owed charges may stem from unpaid fines, civil penalties, judgements, owed property taxes, or past due sewer or water charges. Applicants may be exempted from the bill if they can demonstrate an acceptable binding agreement, if the issuance of a permit is necessary for the correction of a violation, or if a tenant who is not an owner is looking for a permit.

The bill is well-intentioned in that it seeks to incentivize the payment of fines.  However, this bill could also result in a multitude of unintended consequences.  As a starting point, the City of New York imposes numerous costly fines for a variety of unrelated offenses.  A relatively small amount of infractions could add up to the cap of $25,000 very quickly, which would halt the applicant from being able to access any further permits.  Furthermore, the collection of infractions is generally left to other City agencies and eventually passed down to collection agencies, which could further delay the reissuance of building permits after fines are remunerated.[1] This would affect many builders across the city, forcing them to lay-off or sideline construction workers.

In addition, the bill fails to take into consideration that many violations are issued to tenants of properties, and not to owners or managers. Such violations, and their payment, is not under the control of the property owner. In addition, larger buildings, and those with more tenants, would be unfairly at risk from the bill, as they would be inherently prone to receiving more violations.

Even after judgement is imposed, many violations are subsequently challenged and appealed to higher tribunals.  Under this bill, the applicant will be barred from obtaining any further building permits until judgement is satisfied.  And in the cases where judgment is overturned or modified, the applicant would have been unnecessarily harmed because her building projects would not be able to proceed.  This would undoubtedly affect already-tight building schedules around the city and the production of affordable housing.

In the worst-case scenario, builders denied permit issuance because of outstanding debt may choose to go ahead with their project, which will only compromise the public’s safety because DoB will not be able to track these transgressors. 

Although the bill allows for exceptions to the rule as long as a building owner can demonstrate a binding agreement or in instances where a permit is necessary to correct dangerous conditions, this will add another regulatory layer for many building owners who may choose instead to forego the process in its entirety.

Lastly, the reporting requirements of the bill are extensive and burdensome. Large buildings often have complex and interlocking ownership structures and can be partially owned by banks via a mortgage or by investors. Attempting to ascertain information about each owner’s violations or other money owed the City, and subsequently disclosing this information would be incredibly difficult. It would also expose a large number of buildings to a single owner’s violation of the $25,000 limit.

For these abovementioned reasons, REBNY and BOMA voice their opposition to Intro No. 1133.

Carl Hum
The Real Estate Board of New York (REBNY)
Senior Vice President of Management Services & Gov. Affairs
(212) 616-5233
Chum@rebny.com

Daniel Avery
Building Owners and Managers Association (BOMA)
Director of Legislative Affairs
212-239-3662 x 204

 

[1] Anuta, Joe. “City Levies Fines, But Fails to Collect Over Half-Billion From Landlords: Flaws in System Let Owners Continue Construction Despite Violations.” Crain’s. Web March 28, 2016.  http://www.crainsnewyork.com/article/20160328/REAL_ESTATE/160329884/new-york-city-levies-fines-but-fails-to-collect-over-half-billion-from-landlords