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NYC May Actually Crack Down on Developers Who Cheat Taxpayers and Renters

The head of the city’s housing department has laid out steps to boost oversight of tax breaks for developers and other programs overseen by the agency.

New York City officials are stepping up oversight of tax breaks to property developers and other programs overseen by the city’s housing agency, according to an internal memo obtained by ProPublica.

“Because of the critical importance of enforcement and monitoring, we are doubling down on those efforts,” Housing Commissioner Vicki Been wrote in the Jan. 29 memo, which outlines planned hiring of more staff for oversight, technology investments and reorganization steps, some new and some already under way.

The shift comes amid rising attention to housing and related enforcement issues, with Mayor Bill de Blasio and Gov. Andrew Cuomo each pushing plans to create more housing for low- and moderate-income residents with the help of tax breaks and state and federal funds.

It also follows reports by ProPublica that state and city regulators have failed to police the city’s biggest housing subsidy, a $1.1 billion-a-year tax break known as 421-a. Landlords get the subsidy in return for the limiting the rent on apartments. But we found landlords who have failed to register 50,000 apartments for rent limits have still received more than $100 million in 421-a and other tax subsidies.

Been’s memo said that her agency, the Department of Housing Preservation and Development, was creating a working group of agency lawyers and other officials to figure out the best way to oversee compliance of the “ill-fated” 421-a tax break program, which was suspended in January after an impasse over its renewal. A variety of other programs and policies are also under review, Been wrote.

Tenant and housing advocates who reviewed Been’s memo welcomed the new changes.

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“It’s always good to see an agency with a history of non-enforcement, like HPD, increase the staff devoted to enforcement,” said Seth Miller, a tenant attorney at the law firm of Collins, Dobkin & Miller in New York.

Still, it’s too early to know how much difference the changes will make. “That’s the million-dollar question,” said Harvey Epstein, Associate Director of the Urban Justice Center, which advocates for low-income residents. He said the city’s sprawling portfolio of housing subsidies haven’t been closely monitored for compliance with tenant and worker protections.

HPD declined an interview request for Been, but said it “regularly examines its policies and processes to identify ways to be even more efficient, effective, and fair.”  The agency said Mayor de Blasio’s preliminary budget for the city’s 2017 fiscal year includes 80 new positions for HPD but did not specify how many of them are specifically for enforcement staff.

The question of enforcement also arose in Albany last week, where James Rubin, commissioner of the state agency charged with enforcing rent-stabilization laws, faced some tough questions at a budget hearing.

Sen. Brad Hoylman, D-Manhattan, asked Rubin about ProPublica’s report last month that up to 200,000 apartments are missing from the agency’s registry of rent-stabilized apartments despite being subject to rent limits due to tax breaks and other reasons.

“Clearly you can’t manage what you don’t measure. How are we going to get a handle on these apartments that are obviously taken off the rolls?” Hoylman asked. He said the missing registrations could put tenants at risk of being overcharged or illegally evicted.

Commissioner Rubin said his agency would work with the city to determine why the state has fewer apartments listed as being rent stabilized than the city says there should be. He also said the state’s Tenant Protection Unit has negotiated deals with some landlords to bring them into compliance.

Still, Rubin acknowledged that the state hasn’t made it a priority to share apartment data with the city’s HPD. “We had a preliminary conversation with them about doing that, and I think it’s probably a terrific idea to restart those conversations,” Rubin said.

Hoylman, who has sponsored legislation to increase fines on landlords who overcharge tenants, pressed Rubin further: “Are the fines so low that they can just remove units from rent regulation and not expect severe consequences as a result?” he asked. Rubin declined to say.

Assemblymember Linda Rosenthal, D-Manhattan, who co-sponsored Hoylman’s measure, said in a statement she was concerned that regulators are just now beginning to step-up compliance.

“Rent overcharges are always egregious, but they are even more galling when they involve developers receiving valuable taxpayer-funded property tax abatements,” she said. “HPD needs to create systems and strategies to ensure vigorous oversight and prevent the unscrupulous from gaming the system.”

Six New York City Council members have also proposed a bill to increase accountability over taxpayer-subsidized housing, but the measure has yet to have a hearing or be voted on.

Council members Ben Kallos and Jumaane Williams, two of the measure’s chief sponsors, both told ProPublica that they welcome HPD’s steps but that they’re not a substitute for the reforms they’ve proposed.

“Whatever’s been happening now hasn’t worked,” Williams said.

Update, Feb. 9, 2016: The City Council legislation referenced in this story has now been scheduled for a hearing on Feb. 22 at 10 a.m. at City Hall. Details are available here.

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