New York CIty Council Member Ben Kallos

Revolving Door between New York City Government and Real Estate Industry Would Be Disclosed in Application Process

New York, NY – Real Estate developers will be required to disclose contacts within government agencies who have the potential to influence projects currently being considered for city subsidy. Developers will also have to disclose to the City Council their ownership interests and Minority Women Business Enterprise (MWBE) status, as well as their efforts to hire locally, prior to seeking permission to build on city land or obtain millions in city subsidies. Introduction 1323 of 2019, authored by Council Member Ben Kallos, continues his push for transparency in government especially at the Department of Housing, Preservation and Development (HPD). This legislation forces HPD to provide the City Council with a copy of its 37-page “Compliance Package” prior to hearings so that the Council has an opportunity to review and look into contacts that may be facilitating deals for developers.

“Well-connected developers should not be getting sweetheart deals on the taxpayer’s dime," said Council Member Ben Kallos, Chair of the Land Use Subcommittee on Planning, Dispositions, and Concessions. “New Yorkers have a right to know they are getting the most affordable housing possible out of every tax subsidy given to developers. By forcing developers and HPD to disclose relationships, I am confident we will get more bang for every dollar given as a subsidy. The City Council has a duty to perform oversight on the deals made by HPD; this legislation just makes sure the Council has all the available information upfront so it can better negotiate with developers.”
The HPD/HDC joint compliance package currently consists of several key items, including but not limited to:

  • Minority and Women Owned Business Enterprises (MWBE), Disadvantaged, Emerging, or Locally-Based Status (Question 1);
  • Ownership including all principals and officers (Questions 2 & 4(j)-(k));
  • Revolving door regarding the involvement of current or former elected officials, appointed officials, HPD, HDC or city employees (Questions 4(A) & 8);
  • Related entities, family members and self-dealing (Question 5);
  • Violations of human rights, housing law, tenant harassment, occupational safety, liens and judgments (Question 6);
  • Bankruptcies, Litigation, Investigations, Charges, Convictions and Orders must be disclosed (Questions 10 - 12);
  • Executive Order 50 Employment Report including number of full and part-time employees, collective bargaining, affirmative action, Equal Employment Opportunity, subcontractors, and workforce including classification as trainee through journey worker (Appendix);

During his time as Chair of the Committee Planning, Dispositions, and Concessions, Council Member Ben Kallos has focused his questioning of developers applying for subsidies on several key areas:

  • Affordability and Gentrification – checking if affordable unit rents are offered at or below existing rates in the neighborhood or at higher rates that would have a gentrifying effect.
  • Living Wage, Health & Retirement Benefits for Workers –determining whether the developer and its contractors are contributing to the affordable housing crisis by paying poverty wages without benefits.
  • Local Hire – requesting developers disclose contact information for neighbors to take advantage of “local hire” requirements to get jobs at the building site.
  • Total Government Subsidies – forcing disclosure of all subsidies including (1) tax abatements and forgiveness at cumulative and net present values, (2) low-interest loans, no-interest payment loans, tax-exempt bonds, (3) per unit government-funded vouchers and subsidies, (4) city and state grants, (5) low-income housing tax credits (LIHTC), and (6) land and air rights value.
  • Delays – projects with decades-long delay are often asked to explain delays along with how they will be avoided moving forward.
  • Project Costs, Overhead and Developer Fees– forcing disclosure of hard costs, “soft costs” overhead and developer fees.
  • Minority and Women-owned Business Enterprises (MWBE) – forcing disclosure of architects and general contractors as well as developers.
  • Accessibility – will renovations or new construction provide accessibility for all units so that all tenants may age in place.

As a result, HPD and developers appearing before the Planning, Dispositions, and Concession Committee have expanded their public testimony to include much of this information.
Following questions from Council Member Ben Kallos, the New York Post covered ten properties in Brooklyn whose value would exceed one million dollars and therefore trigger the “mansion tax” as they were being given away below market to families earning as much as $122,070 a year. The New York Post editorialized with criticism of the program.
The Planning, Dispositions, and Concessions Committee of the New York City Council is responsible for hearing and voting on affordable housing projects built on city land that are transferred to for-profit developers, non-profit community development corporations, and cooperative housing corporations. Property transfers are nearly always accompanied by tax abatements of 30 to 40 years as well as additional subsidies and financing from city agencies including Housing Preservation and Development (HPD) and Housing Development Corporation (HDC), the New York State Division of Housing and Community Renewal (DHCR), and Housing and Urban Development (HUD).

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