DOB Overwhelmed by Construction Demand

In addition, it takes 16 percent longer, or a total of 13.3 days, to complete a first plan review of a building project requiring significant alterations (called Alteration Type 1 or Alt-1) versus 11.5 days year-over-year. And that number could be skewed, one real estate pro said, by projects that are considered Alt-1s, but don’t require a lot of work, like change of use.

“Since the first of the year we’ve noticed a significant change in the review time for projects and it’s created a significant problem for all our projects,” said prolific architect Gene Kaufman of Gene Kaufman Architect.

And even one day behind schedule can be costly.

“One day costs $15,000 to $20,000 in expenses and $30,000 to $60,000 in lost income, depending on project size, so $45,000 to $80,000 a day,” Mr. Kaufman said.

The DOB’s figures are just averages, with some reviews extending far beyond the two-week period.

Mr. Kaufman’s office filed building permits for seven new buildings in early December, before 2014 building code changes which took effect at the beginning of this year.

“We have had initial meetings for all [seven],” he said. “But we have not a plan review for any of the [seven].”

Mr. Kaufman attributes the slowdown to a backlog of applications following a surge in year-end filings. He said the same thing happened when the code changed in 2008.

“It’s inevitable there will be a slowdown when the code changes,” Mr. Kaufman said.

An improved economy is resulting in greater building activity, and that has also been contributing to the slow pace.

The DOB pointed to a number of factors to explain the slowdown.

“While the Department of Buildings works to minimize the period between new and major job filing submissions and the completion of an initial plan review, numerous factors can influence the average time required for examination,” said a spokesman for the DOB via email. “Increased job filings, missing documents and plan submissions that violate building code and zoning standards all significantly impact average review times. The agency encourages all applicants to ensure that their plans are in compliance with all applicable codes and zoning regulations to ensure timely approval of a job.”

Architect Scott Spector of the Spector Group, who is a columnist for Commercial Observer, said: “With that degree of added work, it’s natural for a slowdown.”

Mr. Kaufman speculated that the pace is actually not slower, but that because of the rush of applications, it’s taking longer to process the jobs.

Initial permits citywide went up 11 percent last year to 98,302 issued compared with 88,290 in 2013, according to data from the DOB. The number of initial permits issued by the DOB for new buildings alone in the city increased in 2014 to 2,047 from 1,890 in 2013, while the number of filings of construction permits rose to 3,132 from 2,549 year-over-year. And there was an increase in the number of Alt-1 initial permits issued to 3,104 in 2014 from 3,058 from 2013 as there was with the filings to 4,935 from 4,479.

DOB Commissioner Rick D. Chandler last month attributed the uptick in permit issuance to the economic climate.

“I think [the increase is] because of economic reasons,” Mr. Chandler said. “I think it has a lot to do with market forces.”

Applications that are code compliant will be green-lighted more quickly than those that are not.

Developer Martin Nussbaum, a principal at Slate Property Group, hasn’t experienced any issues with the DOB process, which he ascribes to making certain “the filing is complete before we put it in.”

The DOB’s permitting process was dealt another blow on Feb. 10 when 16 city employees, 22 property managers and owners, six expeditors (middlemen between developers/architects and the city), two contractors and one engineer were arrested in a building inspection investigation of the DOB and the New York City Department of Housing Preservation and Development. The group, which also included two DOB chiefs, was indicted for its role in widespread housing fraud and bribery schemes in Manhattan, Brooklyn and Queens.

Construction attorney Ray T. Mellon of Zetlin & De Chiara said following the indictments that while the arrests were important, they didn’t address the real issue at the agency.

“Since the construction industry is such an economic force in the city, improvements need to be implemented to increase the DOB’s staff of competent employees that can review and approve permits in a timely fashion,” Mr. Mellon said. “Until this problem is finally remedied, there will be additional opportunities for individuals to seek acceleration of their projects by offering bribes to city employees. I believe that the new DOB commissioner is aware of the fact that his agency is understaffed and needs more resources in order to expedite the processing of jobs.”

Public Advocate of New York Letitia James released a statement about the large-scale bust: “The investigation results announced… scream out for the city to address the underlying issues that foster a culture of corruption: the opaque nature of so many city services, a consistent lack of oversight and the slow pace of permits. … I am calling for more inspectors, faster permitting and a more transparent inspection process.”

A day prior to the press conference announcing the 26 indictments, Mayor Bill de Blasio presented his preliminary budget and it allocated $4.6 million to improve service at the DOB.

That was hailed as good news by the city’s main real estate trade organization.

“The construction uptick has created new demands on the Department of Buildings and we’re encouraged by the mayor’s recent commitment to invest an additional $4.6 million at the agency,” said Steven Spinola, the president of the Real Estate Board of New York. “The administration recognizes that the Department of Buildings needs more resources and is continuing to invest in technology improvements that should substantially decrease wait times as well as create new levels of transparency for plan reviews and inspections.”

Real estate pros have said that when the NYC Development Hub was introduced by the DOB in October 2011 for electronically filing construction plans, it accelerated the construction approval process. But these days, it’s not as efficient these days, some say.

“The hub allows you to file a drawing online, but some of the inefficiencies are related to online payments and filing amendments to the original application because most jobs involve amendments to the original application,” Mr. Chandler told CO last month.

One expeditor said the main consequence of the slowdown is managing client expectations.

“We’re doing more buildings than we’ve ever done and doing more Alt-1s than we’ve ever done,” said Joe Bastone, the vice president of business development at Outsource Consultants, which handles building code and zoning consulting, permit expediting, sign-offs and violation removal services.

To preempt the complaints, Outsource builds the delayed review process into the project’s overall time frame.

“It’s been a customer service challenge because clients, primarily developers, are frustrated by the timing,” Mr. Bastone said. “They want a quick turnaround.”