Local Law 1 of 2018 Creates New Obstacles to Permits and Development in Numerous Neighborhoods
As we reported in the December 2017 issue of the RSA Reporter, due to the enactment of numerous harassment-related laws by the tenant-friendly City Council in 2017, there are now more of these laws on the books than ever before. Owners are subject to an ever-increasing number of laws that impose criminal and civil penalties not only under City laws, but under State laws as well. The irony, of course, is that there is rarely a finding of harassment against owners under any of those laws.
Making this situation even worse is that the City has recently expanded the universe of buildings and neighborhoods in which a certification of no harassment from the City Department of Housing Preservation and Development (HPD) is required before owners can obtain alteration or demolition permits from the City Department of Buildings (DOB). Ironically, at the same time that the City is looking at the private sector to preserve the aging housing stock and to create more affordable housing, it is creating more obstacles to those efforts getting off the ground and becoming a reality.
Before the Council acted in late 2017, there were already a variety of laws which required owners of various properties to apply to HPD for a certification of no harassment before DOB would issue a permit. That requirement applied both to SROs located throughout the City and residential properties located in specific neighborhoods, namely: Manhattan’s Clinton District, Chelsea District, Hudson Yards District and Garment Center District and Brooklyn’s Greenpoint-Williamsburg District. Based upon statistics obtained by RSA from HPD through a Freedom of Information Law request, that review by HPD takes an average of six months!
Despite the fact that HPD has denied a total of only four harassment applications over several years, the City Council was under pressure from tenant advocates to create yet another harassment law. The initial proposal, by Council Member Brad Lander, was to subject all residential alteration and demolition permits City-wide to the certification process. The Council and the Administration then created a Harassment Task Force to consider the matter more carefully and, as a result of the efforts of RSA, in conjunction with REBNY, the legislation, while still onerous, was scaled back dramatically.
Here’s how the new law, known as Local Law 1 of 2018, works:
Does Local Law 1 of 2018 apply City-wide or to particular neighborhoods? Primarily, Local Law 1 applies to buildings in particular neighborhoods and which satisfy a two-part test. To be subject to the law, a building in one of the designated neighborhoods must be included on a “pilot program list” of buildings with six or more apartments with an HPD-determined score on what is called a “building qualification index”, which indicates “significant distress.” To be subject to the law the building must also be located in one of the neighborhoods below:
• Community Boards 4: Highbridge, Concourse, Mount Eden and Concourse Village
• Community Board 5: Fordham, University Heights, Bathgate, Mount Hope and Morris Heights
• Community Board 7: Jerome Park, Bedford Park, Norwood, Kingsbridge Heights, Fordham and University Heights
• Community Board 3: Bedford-Stuyvesant, Stuyvesant Heights and Ocean Hill
• Community Board 4: Bushwick
• Community Board 5: City Line, New Lots, Highland Park, East New York, Cypress Hills, Ridgewood and Starrett City
• Community Board 16: Brownsville and Ocean Hill
• Community Board 9: West Harlem, Manhattanville, Hamilton Heights and Morningside Heights
• Community Board 11: East Harlem
• Community Board 12: Washington Heights and Inwood
• Community Board 14: Breezy Point, Belle Harbor, Broad Channel, Neponsit, Arverne, Bayswater, Edgemere, Rockaway, Far Rockaway and Rockaway Park
While buildings in those community boards are the primary focus of the law, there are other buildings that are also covered outside of those community boards. For example, buildings in other neighborhoods which are the subject of re-zoning in the future are also covered. In addition, buildings which are the subject of vacate orders or HPD’s Alternative Enforcement Program (AEP), or have been the subject of a final determination of harassment by a court or agency are also covered by the new law.
If I own a building in one of the affected community boards, how does this affect me as of today? Local Law 1 of 2018 specifically states that “This local law shall not apply to work relating to applications for construction document approval filed with the department of buildings prior to the inclusion of a building on the pilot program list pursuant to… this local law.” Since the pilot program list has not yet been created, your building is not yet affected.
If the building is subject to Local Law 1 of 2018, what type of work and permits are covered by the new law and will require a certification of no harassment? The law specifies that the “covered categories of work” are as follows:
• Demolition of all or part of the building,
• Changing the use or occupancy of all or part of the building,
• Any addition or removal of kitchens or bathrooms, increase or decrease in the number of apartments or the change in the layout or configuration of an apartment, and
• Any application for a new or amended certificate of occupancy.
Various categories of work are not subject to the new law, including accessibility-related work, work done by a City agency or work done by a 7-A administrator. The categories of work covered and exempted by the new law can also be amended by rules promulgated by HPD.
What is the time period that HPD reviews to determine whether harassment may have occurred at the building? Under Local Law 1 of 2018, HPD reviews the history of activity at the building for the prior five years.
If HPD determines that harassment may have occurred at the building, what happens next? If HPD determines that it has reasonable cause to believe that harassment occurred, administrative hearings are then held. At those hearings, which are conducted by the City’s Office of Administrative Trials and Hearings (OATH), both HPD and the owner have the opportunity to present witnesses and evidence.
If the hearing officer determines that harassment did occur, what is the penalty? If there is a finding of harassment, DOB will not be allowed to issue the permit for five years from that determination. As an alternative to the five-year ban, Local Law 1 of 2018, similar to the Zoning District provisions, allows for a so-called “cure” whereby DOB will issue the permit if the owner agrees to dedicate a portion of the specific building or another building within the community board as affordable housing. The amount of that portion will vary: either 25% of the total floor area of the building in which the harassment occurred, or 20% of the floor area of the building being constructed.
What if I bought a building covered by the law and I had no idea the prior owner harassed anyone? To protect innocent owners, Local Law 1 contains an exception which allows such owners to apply for a waiver if (i) the contract of sale was recorded prior to November 29, 2017, (ii) the current owner was a bona fide purchaser for value, and (iii) any prior findings of harassment occurred under a prior owner.
When does Local Law 1 of 2018 take effect? The new law will take effect on or about October 1, 2018. Because it is characterized as a “pilot program”, the law is set to expire in three years unless the law is renewed at that time.
If you own or manage a building with six or more apartments within the affected community boards, RSA strongly suggests that you contact an attorney to understand how this law affects you and your property.