“THE KUSHNER LOOPHOLE”

A new report claims over 10,000 landlords have used  the “Kushner loophole” in the city permit process, all in an effort to drive out low rent residents.

Aired on October 2, 2018.

TRANSCRIPT

DOES YOUR LANDLORD TELL YOU THE TRUTH?

A SHOCKING NEW REPORT RELEASED BY THE HOUSING WATCH DOG DOCUME WERE NO RENT REGULATED TENANTS IN THEIR BUILDINGS WHEN, IN FACT, THERE WERE.

THIS ALL IN AN OFEFFORT TO PUSH OUT THOSE IN RENT STABILIZED APARTMENTS.

NEW YORK CITY COUNCIL IS LOOKING TO PUT A STOP TO THIS DUPLICITY IN THE BILL.

THE CHAIRMAN ON OVERSIGHT AND INVESTIGATIONS COUNCILMEMBER RICHEY TORRES AND THE DIRECTOR OF THE HOUSING RIGHTS INITIATIVES.

GENTLEMEN, WELCOME TO YOU.

ALWAYS NICE TO HAVE YOU BOTH HERE WITH US.

> I WANT TO START WITH YOU FIRST, IF I REQCAN.

I WANT TO TALK ABOUT THE INVESTIGATION.

HOW DID YOU COME UP WITH YOUR FINDING?

THE ANALYSIS BY HOUSING RIGHTS INITIATIVE IN PARTNERSHIP WITH COUNCILMEMBER TORRES FOUND THAT THE CITY FROM 2016 TO 2018 APPROVED OVER 10,000 FALSIFIED WORK PERMIT APPLICATIONS FROM HUNDREDS OF LANDLORDS ACROSS THE FIVE BOROUGHS.

FOR A LANDLORD TO OBTAIN A CONSTRUCTION PERMIT IN NEW YORK CITY, THEY NEED TO DISCLOSE TO THE GOVERNMENT WHETHER THEY HAVE ANY RENT STABILIZED UNITS.

THIS REQUIREMENT EXISTS TO PROTECT TENANTS FROM A NA TEAR IOUS PRACTICE CALLED CONSTRUCTION HARASS: IT IS A DELIBERATE DECK 'NIQUE LANDLORDS USE TO SYSTEMATICALLY HARASS TENANTS OUT OF THEIR APARTMENTS USING A LEGAL, DEE TRUCKTIVE AND HAZARDOUS CONSTRUCTION.

ESSENTIALLY, I CAN'T GET YOU OUT LEGALLY SO I'M GOING TO MAKE YOUR LIFE SO UNCOMFORTABLE AND DISRUPTIVE YOU'RE GOING TO WANT TO LEAVE, IS THAT THE IDEA?

YES, IT'S A FORM OF MENTAL AND PSYCHOLOGICAL TORTURE.

IT IS MEANT TO WEAR DOWN RENT STABILIZED TENANTS TO GIVE UP THEIR RIGHT TO AFFORDABILITY IN THE MIDST OF AN AFFORDABILITY CRISIS.

10,000, THAT SOUNDS LIKE AN ENORMOUS US IN.

IT IS AN ENORMOUS NUMBER.

HOW DZ THE GOVERNMENT WITH WHATEVER WHATEVER OVERSIGHT IT HAS, ALLOW THAT TO HAPPEN?

YOU HAVE ONE FALSIFIED BUILDING PERMIT, IT'S SLOPPINESS.

BUT IF YOU ARE A DEVELOPER LIKE KUSHNER COMPANIES -- 34 PROPERTIES IN THE SPAN OF FOUR YEARS, THEN IT'S A SYSTEMIC PROBLEM AND IT POINTS TO A FAILURE OF ENFORCEMENT.

THERE IS A LACK OF COORDINATION AMONG THE CITY AGENCIES.

KUSHNER COMPANIES WOULD TELL THE DEPARTMENT OF FINANCE AS WELL AS DHCR THAT IT HAD RENT REGULATED UNITS IN ITS BUILDINGS AND THEN TELL DEPARTMENT OF BUILDINGS IN THE COURSE OF OBTAINING A BUILDING PERMIT IT HAD NO RENT REGULATED APARTMENTS IN THOSE BUILDINGS.

THERE IS NO COMMUNICATION BETWEEN THOSE AGENCIES, THE LEFT HAND OF THE GOVERNMENT DID NOT KNOW WHAT THE RIGHT HAND WAS DOING.

WHAT WE CALL THE 'KUSHNER LOOPHOLE,' THE PROCESS OF FALSIFYING BUILDING PERMITS WITH IMPUNITY BECAUSE OF INEFFECTIVE ENFORCEMENT ON THE PARTS OF THE CITY HAS BECOME A SYSTEMIC PROBLEM ON THE PART OF OUR CITY.

AARON, WHAT IS THE ADVANTAGE?

YOU EXPLAINED THE PROCESS, TO TRY TO DRIVE OUT TENANTS.

WHAT, THEN, IS THE ADVANTAGE FOR THE LANDLORD IN GETTING THOSE TENANTS OUT OF THE BUILDING?

MONEY.

A LOT OF MONEY TO BE MADE.

THIS IS A $1 TRILLION REAL ESTATE MARKET.

RENT STABILIZATION LIMITS HOW MUCH A LANDLORD CAN INCREASE THE RENT EACH YEAR, OKAY.

THEY CAN STILL MAKE A GOOD PROFIT, BUT IT IS LIMITING.

SO THERE IS AN INCENTIVE TO PUSH THESE TENANTS OUT, RENOVATE THEIR APARTMENTS AND THEN REPLACE LOWER-PAYING RENT STABILIZED TENANTS WITH HIGHER PAYING NONRENT STABILIZED TENANTS.

NOT MARKET VALUE TYPES OF TENANTS.

IT IS NOT ACCIDENTAL.

IT IS PART OF A MODEL.

THEY ARE LOOKING INTO IT.

MISTAKES, IF THEY WERE MADE, WERE INADVERTENT.

FALSIFYING BUILDING PERMITS IS HARDLY INADVERTENT.

I IMAGINE THERE MUST BE OTHER -- YOU'RE TALKING ABOUT 10,000 OTHERS.

WHAT ARE THE OTHER DEVELOPERS OR LANDLORDS, I SHOULD SAY, SAYING IN RESPONSE TO THIS ALLEGATION THAT THEY HAVE INTENTIONALLY FALSIFIED DOCUMENTS?

WHAT'S THE RESPONSE?

IT'S AN ACCIDENT.

THERE IS A MISTAKE.

WHICH RAISES A VERY INTERESTING QUESTION.

WHEN DOES AN ACCIDENT TURN INTO A SYSTEMATIC BUSINESS MODEL.

A SERIES OF ACCIDENTS.

A SERIES OF ACCIDENTS, NOT JUST ONE OR TWO.

IN KUSHNER'S CASE 80 FALSIFIED IN BLGSZ.

IT'S WHEN SMOKE TURNS INTO A FULL FLEDGED FOREST FIRE.

WHAT HAPPENS IF I'M A LANDLORD AND I TURN IN THIS FALSIFIED DOCUMENT AND YOU CATCH ME?

THERE IS A DISCONNECT BETWEEN WHAT ACTUALLY HAPPENS AND WHAT SHOULD HAPPEN.

FALSIFYING A LEGAL INSTRUMENT LIKE A BUILDING PERMIT IS A MISDEMEANOR UNDER LOCAL LAW AND A FELONY UNDER STATE LAW SO THERE SHOULD BE A REFERRING TO THE PROPER AUTHORITIES FOR CRIMINAL PROSECUTION.

HAS THERE BEEN?

THERE IS NO EVIDENCE OF CRIMINAL REFERRALS.

SO I'M ENACTING, I'M INTRODUCING LEGISLATION AIMED AT CLOSING THE 'KUSHNER LOOPHOLE' AND PREVENTING WHAT I CALL THE WEAPONIZATION OF CONSTRUCTION, THE USE OF CONSTRUCTION AS A WEAPON FOR DISPLACING PEOPLE FROM THEIR HOMES.

ONE REQUIREMENT IS D.O.B.

UNCOFFERS EVIDENCE OF FALSIFIED BUILDING PERMITS, IT MUST REFER THOSE CASES TO LAW ENFORCEMENT FOR CRIMINAL PROSECUTION.

IT MUST.

WE HAVE A MINUTE OR SO LEFT.

FINISH UP WITH THE PROPOSALS, ASPECTS OF THE PROPOSED LEGISLATION.

THE LEGISLATION WOULD REQUIRE INFORMATION SHARING, AUTOMATED INFORMATION SHARING BETWEEN THE DEPARTMENT OF BUILDINGS AND THE DEPARTMENT OF FINANCE.

SECOND, IT WOULD REQUIRE D.O.B.

TO BE PROACTIVE RATHER THAN REACTIVE.

SO IF THERE IS A DEVELOPER WHO FALSE IDENTIFIES A BUILDING PERMIT, UNDER MY LEGISLATION THE WHOLE REAL ESTATE PORTFOLIO OF THAT DEVELOPER WOULD BE SUBJECT TO AN AUDIT.

THE NUMBERS ARE ASTONISHING.

IT IS A FASCINATING CONVERSATION.

OUR HOPE IS THAT WE CAN GET YOU BOTH BACK IN HERE IF THIS MOVES FORWARD AND YOU CAN BRING US UP TO DATE WHAT'S GOING ON.

COUNCILMEMBER, GOOD TO SEE YOU.

AARON, GOOD TO SEE YOU ALSO.

BOTH BE WELL.

Funders

MetroFocus is made possible by James and Merryl Tisch, Sue and Edgar Wachenheim III, the Sylvia A. and Simon B. Poyta Programming Endowment to Fight Anti-Semitism, Bernard and Irene Schwartz, Rosalind P. Walter, Barbara Hope Zuckerberg, Jody and John Arnhold, the Cheryl and Philip Milstein Family, Janet Prindle Seidler, Judy and Josh Weston and the Dr. Robert C. and Tina Sohn Foundation.

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