The Real Deal New York

Blame game: Expediters say they’re not at fault for landlords’ inaccurate permits

After several top building owners were found to have given the DOB incorrect information about their rent-stabilized tenants, their go-betweens speak out
By Kathryn Brenzel and Will Parker | October 09, 2018 07:00AM

(Credit: iStock)

When some of the city’s most prominent landlords were exposed last month for failing to disclose rent-stabilized tenants on construction paperwork, many blamed the intermediaries who handled the filings. But those middlemen, known as expediters, say it’s up to landlords to provide the basic facts about the buildings they own — and to catch any errors before applications are submitted to the city.

A recent analysis by The Real Deal found that in 2018 alone, roughly 45 percent of A2s, a subset of alteration permit applications filed with the city’s Department of Buildings, originally indicated that there were “no” rent-stabilized apartments onsite when tax records showed otherwise. Providing the correct information, found in Section 26 of applications, can help the DOB investigate tenant harassment at buildings where there is ongoing interior construction. Developers and landlords, including the Kushner Companies and BLDG Management, have pointed to the third-party filing representatives as the reason these errors occur.

Malgorzata Gojlik, owner of MAG Building Expediters, said it’s easy to blame expediters, but it’s the owners who sign off on all the documents filed with the DOB.

“The owners are blaming who? The expediters? Then they shouldn’t be signing the applications,” she said.

Goljik did admit that because expediters know they will have to amend various parts of a given application over the course of the permit process, they will often fill out applications without all the information they need, checking off “no” because they didn’t get confirmation from the owner and didn’t want to hold up the application. But the DOB told TRD that section 26 is ultimately “the owner’s responsibility.”

“We as the filing representatives and the architects have no way of confirming that there are active rent-controlled [or] stabilized apartments in a building,” said Thierry Guye, owner of consulting firm Conversano Associates.

Some landlords voluntarily amend incorrect paperwork early in the permit process, or the DOB makes the fix during a plan examination. But many don’t, as TRD found last month, with major landlords like the Blackstone Group and Solil Management holding multiple permits at rent-stabilized buildings while checking “no” for rent-stabilized tenants. (Blackstone said the errors would “not happen again.”)

During the last two years, the DOB has stepped up its enforcement of Section 26 violations, handing out $1.84 million in fines so far in 2018. That’s up from $240,000 last year and $981,660 in 2016.

And now, the city may soon crack down even further. Last month, Council member Ritchie Torres proposed legislation that would require the DOB to audit a developer’s entire portfolio if one permit is found to be filed incorrectly or if more than five amended building permits are submitted.

In some cases, landlords do appear to be confused about whether or not they have to check the box at all. For work done in the commercial or retail areas of rent-stabilized buildings, TRD found several landlords who checked “no” said they did so because there were no tenants living in those sections of the building.

The DOB didn’t have a clear-cut answer, saying that the scope of work would decide whether landlords need to report the existence of rent-stabilized tenants upstairs.

And Lori Boccadoro, also of Conversano, said there’s confusion among individual condo unit owners — residential or commercial — about whether the question posed in Section 26 applies to the entire building or just the part of the property being worked on.

The Section 26 issue is just one part of a much larger problem, said Daniel Grand, owner of Violation Removal Inc., a Queens-based expediter service that helps property owners deal with building violations.

“When you talk about rent stabilization, don’t be fooled by landlords,” he said. “They’re the ones who try to beg expediters and architects and contractors to come up with clever techniques to get people out so they can jack the rents up.”