It’s not just Kushner Companies.
A housing watchdog group that revealed 80 falsified building permit applications by the company once run by Jared Kushner released a new report Monday — showing scores of landlords had lied about the presence of rent-regulated units in their buildings on some 10,000 permit applications over the last two-and-a-half years.
“If the landlord checks, you know, the ‘no’ box on one or two permits applications fine, maybe it’s an accident,” Housing Rights Initiative executive director Aaron Carr said. “But when does an accident turn into a systematic business model? And I would argue when that accident keeps happening over and over and over again.”
Carr was joined outside the Kushner Companies building at 666 Fifth Avenue by Councilman Ritchie Torres — who announced legislation to close what he called the “Kushner Loophole.”
At issue are applications for permits to do construction inside residential buildings. As part of that application, owners are asked whether they have any rent-regulated units at the property. Housing Rights Initiative and the Associated Press found earlier this year that the Kushner Companies had checked “no” on dozens permit applications — but that a cross-check of Department of Finance data showed those buildings did indeed have rent-regulated units.
Following the AP investigation, the city Department of Buidlings fined Kushner Companies $210,000 in August for 42 false permit applications.
But Monday’s report indicates the behavior is widespread — the group found 10,000 examples of landlords declaring to the Department of Buildings that there were no rent-regulated units in their buildings, despite records in another city agency, the Department of Finance, indicated there were such units.
“I am introducing legislation aimed at closing the Kushner loophole, in an effort to prevent what I call the weaponization of construction, the use of illegal construction to harass tenants and displace them from their homes and their neighborhoods,” Torres said.
Advocates have said that the presence of rent-regulated units sparks more scrutiny of construction in order to prevent tenant harassment — disruptive construction meant to drive out rent-regulated tenants so landlords can flip the unit to market rate renters in gentrifying communities. But the Buildings Department said all permits are scrutinized to prevent tenant harassment.
“DOB thoroughly reviews and audits permit applications to protect residents, whether or not the landlord checks the rent-regulation box on our forms,” DOB spokesman Joseph Soldevere said.
The section of the permit at issue is “one element among many that review,” he said.
”Of critical importance are DOB plan examinations and audits, which determine whether proposed construction is safe for all building occupants, regardless of the rent they pay, and whether there’s an adequate tenant-protection plan in place before work begins,” the Soldevere said.
The department also noted that the 10,000 allegations of falsified permits in the report amounted to just 3 percent of those issued during the time period.
But Torres argued hundreds of developers should not feel that they have carte blanche to lie on 10,000 city permit applications.
“DOB made it sound like it’s nothing more than filling in a box. I think lying to the city government, falsifying a legal instrument is a serious matter. You might remember the Housing Authority ran into trouble because it falsified documents relating to lead safety,” Torres said. “So whether it’s about lead safety or construction, no one in the City of New York has any business lying to the government and should not be able to do it with impunity.”
Torres has posited that one reason developers continue to lie about rent-regulated units is that they face few consequences — while the city can issue fines like the $210,000 bill it sent to Kushner Companies, it’s lousy at collecting the cash. An HRI report earlier this year found Kushner Companies owed $500,000 in unpaid fines; citywide, people owed $1.5 billion in uncollected fines.
“What is the point of issuing violations against developers like Kushner Companies if the city has no intention of collecting the debt from those violations?” Torres asked.
The bill Torres will introduce would require the Buildings and Finance departments to cross-check for false statements on permit applications; if a developer is caught lying, DOB would then be required to conduct an audit of the building owner’s full property portfolio to look for false statements elsewhere.
According to the DOB, it has issued more than 800 violations for false filings, usually after finding either unsafe work or a pattern of false statements by the developer, between fiscal years 2016 and 2018. It noted the false statements doesn’t mean improper construction work was done, and it cited other future efforts surrounding tenant harassment.