HPD adds provision that allows certain contractors to escape watch list

After a Queens-based company was linked to a bribery scandal that sent a Department of Housing Preservation and Development official to prison, its executives shifted their focus to private development work under a different name.

Great American Construction Corp.’s executives now operate GAC Builders, a company that is legally separate but whose website lists all of Great American’s HPD projects and shares its address. Though the bribery charges against one of its executives were ultimately dropped nearly five years ago, Great American is one of 28 companies on the city’s latest “enhanced contractor review list,” a roundup of businesses that for one reason or another require “extra scrutiny” when they bid on city projects.

The list includes contractors and subcontractors hired by the city who have allegedly violated labor law or have a reported history of construction quality issues on their sites. Over the years, the list has drawn some criticism, since companies are permitted to bid on city-funded projects and have, in many cases, still secured contracts. On the other hand, companies remain on the list for several years, even when their presence is based on the actions of those they hire.

HPD recently created a new provision that allows contractors to apply for conditional removal from the list. Companies are eligible if they’ve been on the list for at least four years and can prove that they haven’t performed the kind of work that landed them on the list during that time. If they undertake projects similar to that work, they will still face “strict scrutiny” from the city, an HPD spokesperson said. The upshot, though, is that the company’s name won’t show up alongside others accused of violating labor and construction law.

It wasn’t immediately clear on Friday why Great American remains on the list. William Clarke, president of GAC, was accused in 2012 of funding $50,000 worth of renovations at the home of Wendell Walters, a former deputy commissioner with HPD, in exchange for city contracts. At the time, Bill de Blasio, then the city’s public advocate, and community groups called on the city to terminate contracts with companies facing corruption charges. At the time, Great American had four contracts with the city. That same year, HPD introduced the enhanced review process.

The charges against Clarke were dismissed in November 2012, well before Walters’ trial, though documents filed in Brooklyn Federal Court do not shed light on why they were dropped. (Court documents also indicate that Clarke was permitted to go on a cruise to Bermuda with his family shortly after he was arrested.) An attorney for GAC noted that the company isn’t technically on the enhanced review list and could bid on HPD projects without facing extra scrutiny. GAC, however, focuses on private development.

Other contractors on the enhanced review list include two companies on The Real Deal‘s ranking of the most active general contractors in the outer boroughs, Procida and Lettire Construction. Matthew Gross, head of Lettire Construction’s development arm, indicated that the company had long been on the enhanced review list due to one of its subcontractors, who owed millions of dollars in back wages to workers. HPD can place companies on the review list if they hire a subcontractor on the list or if their subcontractors fail to pay prevailing wages. Lettire’s subcontractor, Enviro & Demo Masters, was charged in 2013 with underpaying its workers by more than $650,000. The company’s owner, Jover Naranjo, and its foreman, Luperio Naranja Sr., were sentenced, respectively, to six and four years in prison for falsifying payrolls. In 2014, the company was also barred from bidding on federal contracts for three years.

Gross noted that being placed on HPD’s list inspired the company to ramp up its job oversight.

“It was a wake-up call and showed that we needed to implement more controls,” Gross said.

Procida, Lettire and other companies on the list have continued to work on HPD-funded projects. A New York Daily News story in 2014 noted that 10 contractors and a developer working on affordable housing projects owed more than $11 million in back wages.

Mario Procida, president of Procida Construction, said he plans to meet with HPD in June to request removal from the list. He noted that his company was also placed on this list due to the missteps of its subcontractor. Still, he said the enhanced review process has been a positive for the industry.

“Financial responsibility flows up to the GC. It flowed up to us,” he said. “It was the agency really saying, ok, you need to enforce these rules on the subs. They are looking to hold the GC accountable as another employer.”