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Deals & Dealmakers

Development community calls for more efficient DOB

Earlier this month, New York City’s Department of Buildings announced a massive bribery ring following an investigation that spanned across three calendar years.

The investigation saw nearly 50 members of the city’s building and construction community face charges amidst claims that they pocketed everything from Caribbean cruises to new SUVs to push paperwork through the system for harried developers.

Ray Mellon
Ray Mellon

The group of suspects included municipal inspectors and even the Chief of Development. It also encompassed expediters, or third party professionals contracted to help get plans approved as quickly as possible.

Multiple local expediters have found themselves in legal trouble before this investigation came to light for similar infractions.

The New York Daily News points to several instances from recent years that saw expeditors acting outside of legal bounds while they set to work, including one individual that submitted doctored photographs in order to get a permit approved, another ignoring a fine after being censured for using foul language when addressing a DOB inspector, and another that aided and abetted an unlicensed architect.

Ray Mellon, a construction litigator and senior partner of Zetlin & De Chiara, pointed a finger at the DOB in the aftermath of the sting, suggesting that the agency’s own flaws shouldered a great deal of the blame for the level of corruption currently infiltrating it.

“I don’t necessarily hold up for vilification of the expeditors,” Mellon told Real Estate Weekly.

“Are there bad apples?  There’s no question. (However) I would disagree with the premise that all expeditors are bad people at heart, or doing something wrong.”

“They fill a need. They’re very respectful, they’re honest people,” said Mellon, making it clear that expeditors should not be generally considered criminals or cheats.

That need, says Mellon, is generated by the sluggish pace by which the DOB often operates.

Mellon argues that the a more efficiently agency would lead to a significant cut down on the amount of bribery and sidestepping that currently takes place while developers and others with  real estate interests attempt to speed up the greenlight process.

“What you need to do is fully staff the DOB with competent people that can promptly facilitate the approval process,” said Mellon. “That’s the heart of everything.”

“More often than not, the process is time draining and a very costly barrier,” said Alex Onishchenko, director of marketing for Alpha Realty, agreeing with Mellon’s contention.

“It often inhibits necessary apartment renovations, especially ones that raise the standard of living for the inhabitants of these units. These residents, that many times are the occupants of affordable housing apartments, are actually amongst the lowest income groups in NYC and would benefit the most if the process was streamlined. An issue that arises because of this, is that in an effort to mitigate the costs by the developer/landlord, the renovations themselves are often of less quality than they could’ve been.”

While an advocate for expediters, who are often trusted with helping submitted plans earn the approval of the DOB in the most efficient manner possible, Mellon admits that not all of the recent examples of corruption stem from bogged down projects alone.

“I’d like to think that these changes would cure the ills of human nature but I’m not Polyanna,” he said. “I think that there’s always some form or fashion of people who will be trying to get more than they’re entitled to.”

“I’d like to think that this recent incident would cause people to look at things anew and take the right action but it’s a question of priorities,” Mellon said. “Priorities are not necessarily DOB priorities because I believe the DOB personnel want more funding and want more staff. I think it’s a question of priorities for the administration.”

Mellon said that trimming down the approval process has been a problem for multiple administrations and would not place blame squarely on the current one’s shoulders.

“The Department is always looking for ways to find efficiencies in the job filing and permitting process that reduce wait times in the development process,” a spokesperson for the DOB told Real Estate Weekly.

“The agency continues to build upon our electronic filing system features, which will enhance the plan exam process.”

While Mellon acknowledges the current administration’s efforts to adjust the system, he is still concerned with its current state.

“Everybody seems to think that the DOB can function with just a skeleton crew,” said Mellon, adding that expeditors are likely “here to stay” regardless of what changes are made going forward because there will always be developers and other real estate professionals looking for a break on something.

“Another aspect of this investigation was inspectors dismissing violations that shouldn’t be dismissed,” Mellon said but championed the DOB’s efforts to prominently integrate technology into the inspection and approval process.

“If people know that Big Brother’s watching the fear of that can be an elixir to cureing some the problems,” he said, noting that digital records of what inspectors are doing will make it harder to juke the system.

“It is an unfortunate reality that there is always the potential for corrupt activity,” said a source that is very familiar with the approvals process but opted to not be identified.  “However, the Department of Buildings’ best defense is having predictable, transparent, and efficient operations that minimize any incentives for illegal behavior.”

“Given the substantial contributions real estate and construction make to New York City’s economy, tax base, employment and quality of life every year,” added the source, “the importance of a well-resourced Department of Buildings cannot be overstated.  In many ways, the DOB is one of the most impactful economic development agencies the city has”

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