In December 2009, in an effort to improve energy and water efficiency in New York City’s largest existing buildings, the City Council enacted the Greener, Greater Buildings Plan. Amongst the recommendations and regulations, was the passage of Local Law 84, which requires property owners to benchmark the energy and water use of their buildings, and submit that data to the US Environmental Protection Agency (EPA). This means that owners must collect data about the utility usage of their properties, prepare and analyze the data in a specified format and submit that report online using the EPA’s Portfolio Manager. The data will then be used to compare, or benchmark, water and energy usage across different buildings throughout the city.

IS MY PROPERTY SUBJECT TO THE BENCHMARKING LAW?
To determine compliance, NYC uses the gross square footage of the building as determined by the Department of Finance. A property is subject to the law if it meets one of three conditions:
•    One building more than 50,000 gross square feet
•    Two or more buildings on the same tax lot that together total more than 100,000 gross square feet
•    Two or more condominium buildings, governed by the same board of managers, and together exceed 100,000 gross square feet
Users of EMPOWER NY can easily check if their properties are subject to the benchmarking law by visiting the benchmarking page under the Compliance tab.  The information there is linked to a list of subject properties released by the Mayor’s Office. It is important to keep in mind that the gross square footage used to determine if a property is subject to benchmarking may actually differ from the one that is reported by the Department of Finance, since that number does not include certain areas like basements and parking garages.
Multiple buildings on one tax lot must be benchmarked separately if they are individually metered for energy and have independent heating, cooling, and domestic hot water systems. If the buildings share a meter or any of these systems, the property must be benchmarked as a single entity as if the multiple buildings were joined.

MY PROPERTY NEEDS TO BE BENCHMARKED; WHAT DATA DO I NEED?
To benchmark a property, you must collect the building gross square area broken down by space use type, the property’s whole building energy use, its operating schedule and additional space use attributes. One area of good news is that there is no need to collect water usage data since DEP will upload this data directly to Portfolio Manager.
Calculating an accurate gross square footage is important, since an incorrect value will cause a building to appear to be performing worse than it actually is. The actual building gross square footage can be measured or pulled from an architectural drawing, and as mentioned earlier, will often be larger than that used by DOF.
The whole building energy use is all energy used by the property, whether by the owner or tenants, and must be reported by type, like electricity, fuel oil or district steam. A report of whole building electricity, gas, and district steam use can be obtained from Con Edison via email for a fee of $102.50 per building. National Grid will provide information for its customers in Brooklyn, Queens, and Staten Island as well. The data may also be compiled manually from the property’s meters, utility bills and tenant-provided data.

Portfolio Manager requires information about the property’s operations, such as operating hours, amount of personal computers and number of workers on the main shift. Since accurate space use information will improve the accuracy of a property’s benchmarking, it’s advisable to collect as much actual information from tenants as possible. However, property owners are only obligated to provide actual space use information for spaces under their direct control or data that they have received from tenants. If exact data is unavailable, the space use attributes of tenant space may be estimated and Portfolio Manager will actually suggest default values.

Under Local Law 84, owners are required to request this information from non-residential tenants with their own utility meters, but there is no obligation to follow up with nonresponsive tenants. For residential, and shared-meter, tenants, owners may also request this information, but the law does not require it, and tenants are not obligated to respond.

I’VE COLLECTED ALL THE DATA; NOW WHAT DO I DO WITH IT?
Once a property’s energy usage data is collected it needs to be submitted to the EPA using their Portfolio Manager. The system can be confusing, so at the request of the Mayor’s Office, the Association for Energy Affordability offers public and onsite half-day training seminars. Free online training is also available at the EPA’s website, which can be completed in under an hour.
Portfolio Manager should be accessed via the New York City web link provided at www.nyc.gov/ggbp rather than going directly to the EPA site. This will link your account to NYC’s electronic reporting structure, and must be completed before it is possible to submit a compliance report. Inside Portfolio Manager, each NYC building’s Borough Block Lot (BBL) number needs to be entered in the Notes field for that property.
Once all the data has been entered, Portfolio Manager will calculate a Current Source Energy Intensity for all building types, and a Current Rating for a list of fourteen building types, including commercial offices and schools. At that point, you will be able to electronically submit the NYC LL84 Benchmarking 2010 Compliance Report via Portfolio Manager.

I’VE SUBMITTED MY REPORT; ANYTHING ELSE I NEED TO DO?
Local Law 84 requires property owners to maintain three years of compliance records, which the Department of Buildings (DOB) may inspect and audit. This includes the submission confirmation email from EPA and copies of the energy data entered into Portfolio Manager. Inquiries concerning these records, and the process in general, can be directed to DOB at sustainability@buildings.nyc.gov.
Now that you have all this energy use data collected, you might as well use it yourself. Tracking your property’s Current Rating or Current Source Energy Intensity year to year may identify the need to retune or retro-commission systems, or the success of capital improvements or changes to operations. As more and more tenants become conscious about reducing energy usage, you will definitely see an advantage to marketing your building’s energy performance.
Now that you have a better understanding of what the new laws entail, you can make a more informed decision about how to tackle your benchmarking obligations. Whether you work with an outside consultant or decide to handle benchmarking yourself, knowledge of the rules and requirements will help you make informed decisions and avoid common pitfalls.

CUT THE FAT
An effective to-do list should only list the tasks that you may forget or overlook without writing them down. Listing routine, day-to-day tasks only clutters your list with things that you do by habit anyway.

GROUP ITEMS BY HOW YOU GET THEM DONE
It’s tempting to list your to-do tasks by client, project, building, agency, etc. but while that may be how you think of them, it’s a lot more effective to group them by what kind of task they are, or more specifically, what you need to do to get this task done. For example, grouping all your phone calls together will help you blast through the list when you are in a place you can make phone calls, grouping all of the things you need to do online will help you get organized and get more things done when you get to a computer.

BE VERY SPECIFIC
Creating general tasks like “take care of the billing issue” is not the way to go. Instead, break the tasks down to their simplest actions. Think it will just clutter up your list? Think again. Not only will listing the tasks as specific items make it easier to categorize and get done, it will help keep track of exactly what the general project is up to. It’s also a nice feeling to check off the things you accomplished as you go.

KEEP IT VISIBLE
Place your to-do lists where you are prone to look throughout the day, such as your desk, near the phone, or keyboard. Having your list visible also means keeping other lists and clutter away. Hiding the list in a drawer or under a pile of papers on your desk is a sure way to guarantee the list becomes outdated and eventually useless.

USE IT OR LOSE IT
Use your lists every day and throughout the day. Once you get in the habit of adding items the correct way and checking them off when they are complete, you will not only save time and get more done, but your stress of getting things done will reduce as you gain trust in your to-do lists and rely on them more.

A TREE GROWS IN BROOKLYN
Street trees are a terrific improvement to enhance the exterior of a property. In 2001, Trees New York studied the economic impact of trees in commercial districts in New York City. The study demonstrated that green infrastructure complements the economic vitality of commercial districts, while providing regional benefits that improve the quality of life for people living in the area. Healthy commercial districts influence merchants’ decision to rent commercial space, attract customers and encourage them to stay longer and return. Learn more about planting and caring for street trees at www.treesny.com.

FIX THE PROBLEM, NOT THE SYMPTOM
An increase in repair costs may mean that repairs are not solving underlying problems and money spent is being used merely as a band-aid.  If an item has been repaired or replaced more than twice in recent months it’s a good idea to take a closer look at the source of the problem, where there may be something causing the frequent breakdown.  For example, looking behind water-soaked walls before patching and plastering may reveal a slow leak in a pipe.  Fixing that leak will prevent more water damage and you can put your joint compound and trowel away for a while.  Maintaining O-rings and aerators in faucets can prevent leaks and reduce water flow, thereby conserving water and lowering water bills.

Speaking of repairs, consider purchasing the most reliable and durable replacement component or part, to avoid repeat equipment failures and the need to pay another labor charge.  It’s easy to be seduced by the lower costs of the lesser quality product, but the long term costs of future replacements and additional repairs far outweigh to short-term savings. As an added benefit, newer, high-quality components are often the most energy efficient ones.

DON’T DRAIN YOUR WALLET
Water usage can be a major expense for a building.  Whether it’s the direct water usage cost or the cost of managing water in your property, either can lead to escalating costs if there is a leak that goes unreported and unrepaired. A leaky fixture, toilet or tub can waste thousands of gallons of water annually.  Fixing a few simple leaks can save thousands of dollars on your water bill each year.  If you see your water usage escalating, check your meter during a period when water’s not being used. If the level changes, you have a leak. When renovating bathrooms, select low-flow showerheads, faucets and toilets. The WaterSense website provided by the EPA is a wonderful source of information for ways to reduce water usage.
YOU HAVE THE POWER
Reducing your property’s energy usage is an obvious way to save money and go green.  If you feel that your energy costs are altogether too high, explore the free energy audit services that are offered by local utilities.  The Pratt Center for Neighborhood Development has an easy to use calculator that can help you figure out whether your building operates efficiently or if it’s an energy hog. www.prattcenter.net/energy-efficiency-calculator

Looking for Energy Star rated equipment is always a good idea. ConEd has in interesting guide, titled Energy Efficiency – Multi-Family Residences Can Save by Upgrading to High-Efficiency Equipment, available online at www.coned.com/energyefficiency/residential_multifamily.asp
Also, encourage your residents to look for Energy Star rated window air conditioners so they can save money on their utility bill. Additionally, the building’s electric service will not be unnecessarily drained during the warm weather, avoiding brownouts.

Going green can save you money and lower your property maintenance costs. Tackle a category that seems to be costing you more than it should and take advantage of the low and no-cost audits and services available to you.

Catherine Barton is Managing Director of The Pinwheel Group, a sustainability-focused consultancy with all the skills of a traditional marketing and branding company. www.pinwheelgroupinc.com

This column will highlight some of the latest regulations affecting New York City property management.

ENVIRONMENTAL CONTROL BOARD
In the past, recipients of ECB violations had twelve months to reopen a defaulted violation. The new guidelines issued by ECB drastically shorten the reopening time frame to only 45 days from the original hearing date. As per the new regulations, reopening a defaulted violation after 45 days will only be allowed if specific documented proof was available (e.g. respondent was not the owner of the property at the time the violation was issued). ECB further limits the reopening of violations by only allowing violations to be reopened one time. Therefore, it is more critical than ever to ensure that all the proper proof documents are in order before attempting to reopen a violation.

Speaking of having proof documents in order, ECB has now instructed the Administrative Law Judges to not grant adjournments at hearings except in truly extenuating circumstances. Therefore, in order to be able to have your violation dismissed or penalty reduced at the hearing, you must be ready to provide all proof at the first hearing.
DEPARTMENT OF BUILDINGS AND FDNY
The DOB and FDNY violations that are not dismissed at a hearing require a certificate of correction to resolve their status. In order to certify correction for DOB violations, you are now required to provide actual pictures of the corrective work that was done, even when an application was filed and signed off.

The Boiler, Elevator, and Façade divisions of DOB will no longer accept new building ownership as grounds for dismissal for violations issued for not filing the required reports.  They now take the position that it is the new owners’ responsibility to make sure there were no violations prior to purchasing the building.
Several DOB penalty amounts have increased significantly. Boiler violation penalties have increased from $500 per year per building to $1,000 per year per boiler. Elevator violation penalties have increased from $1,000 per elevator device to $3,000 per elevator device (personal elevators, dumbwaiters and escalators included). Façade violations have increased from $150 per month for late filing to $250 per month along with an additional $1,000 penalty for every year filing late. In addition to these penalties, filing fees were increased for all of the above reports.

The last new law I wanted to share with you comes from New York State; yes, they’re getting involved too. The NYS Assembly has passed a law requiring DOB to collect, for the benefit of the state, a $1,500 civil penalty for all Class 1 Immediately Hazardous violations that are not certified as corrected within 60 days of issuance. Any such violation, that is not certified as corrected within that time frame, will receive an additional DOB violation that can only be dismissed once the $1,500 payment is received. This penalty is separate from the ECB penalty and the DOB civil penalty for work done without a permit. This is potentially a third penalty for the same violation.

Even though it can be difficult at times, we still love managing real estate in New York City. Staying knowledgeable and prepared only make it easier.

Mark Hertz is president at Mark Hertz Company, which specializes in professional ECB representation and expediting services to reduce violations for sales, refinancing and real estate tax abatement (J51). For more information contact (888) 338-9606 or www.dobnycviolations.com.

While the environmental benefits of a paperless office are obvious, it’s the tangible economic savings that make it a no-brainer. Paper and toner cost money, but so does wear and tear on office equipment. Reducing the amount of paper and file folders needed to store documents can increase the longevity of printers, photocopiers and fax machines by reducing their usage. But the cost savings don’t end there. Physical files take up valuable room, so storing them electronically frees up space, cuts clutter, and adds up to real savings in rent. Then there’s the human cost. Hunting for documents and files wastes precious time, and as every smart manager knows, time equals money. Electronic storage enables workers to find materials faster as well as transmit them expeditiously without having to use a photocopier, envelopes and postage. Lastly, there’s the added benefit of security. Confidential data that can only be accessed via a password is safer than paper files that can get misplaced, stolen or viewed by unauthorized parties. Plus, storing documents online ensures that crucial information won’t be destroyed in the event of fires, floods or other disasters.

Going paperless is one of the design philosophies that drives development at EMPOWER. Using some of the tools that are available through the system, you and your office can reap the rewards of reducing your reliance on paper. The most obvious of these features is EMPOWER’s online document system. Throughout the site, users can easily upload any file and attach it, for example, to a violation or work order. On EMPOWER’s end, the files are compressed, encrypted and stored in a secure database, where they can then be accessed at anytime, from any place. Some EMPOWER customers have already made the commitment to go paperless when handling their violations, and have become aggressive uploaders, confident that their data is safe and secure. One great feature to keep in mind is EMPOWER’s “upload once, attach everywhere” ability. Once a file has been uploaded once, it can easily be attached to a different complaint or request at a later date, eliminating the need to upload the same documents again and again.

Another EMPOWER innovation that will revolutionize the way you way you handle work orders is our FaxScan™ technology. Every work order created from within EMPOWER is enabled with this proprietary technology, allowing you to completely eliminate the need to physically send work orders to vendors and manually process them when they are returned. When a work order is created, it can be faxed or emailed directly to a vendor or super from within EMPOWER. Plus, there’s no need to print it out, since its saved as a PDF, ready for viewing at any time. When work is done, the completed work order can then be faxed right back, toll-free, to 1-855-FAX-SCAN, where it is electronically

recognized, archived and attached to the appropriate violation or repair within EMPOWER. The process is painless, and the savings in time and money are real.

As mentioned before, we’ve already gone paperless in our day to day communications. With the prevalence of smart phones, accessing and responding to email has become part of daily business life. With EMPOWER’s rich notes feature, you can extend that level of connectivity in ways that were much more cumbersome before. Whenever anyone adds a note in EMPOWER, the members of their team associated with that building immediately receive an email notification with the contents of the note. By simply replying to that email, users can create a follwup note, and start a conversation. And, like everything else in EMPOWER, the notes are saved forever, where they can be accessed from anywhere at anytime.
The City of New York also sees the value in paperless transactions and they recently launched a new online e-Certification process to handle HPD violations. Unfortunately, they failed to recognize the importance of making any paperless system seamless and stress-free. While their intentions are laudable, the execution may actually be more bother than it’s worth. (We actually met with the HPD team that developed the system, where we discussed simplifying the process and working together in the future.) The system allows owners and managers to register, one, and only one, person to certify violations for a particular building online. Once registration is complete (a process that can actually take a few days), violations can be certified by logging in, filling out some info online and waiting for the system to call a phone number you specified during registration, with a unique confirmation code that you then enter online. The phone verification happens every time you certify a violation, making it difficult to delegate the responsibility of certifying violations to anyone else. Any changes to the registered user, such as a different confirmation phone number, requires another signed and notarized form, along with the requisite few days of processing.

By merely harnessing some of these tools, you can transform your management business and increase your bottom line.

Dave Gross is President and Chief Technology Officer at EMPOWER NY.

In order to fully understand this issue, it is important to understand the statutory schemes relevant to this discussion.
The New York City Housing Maintenance Code (HMC) establishes the minimum standards for health and safety, fire protection, light and ventilation, cleanliness, repair and maintenance, and occupancy in residential dwellings in New York City. This code is administered by the NYC Department of Housing Preservation and Development (HPD), which often turns to the New York City Housing Court in cases where HMC provisions are not being fulfilled. In such cases it brings what is known as a Housing Part (HP) action.
In addition to the HMC code which applies broadly, the New York State Division of Housing and Community Renewal (DHCR) issued special laws and procedures known as the Rent Stabilization Code (RSC) to rent stabilized apartments. The DHCR also issued another set of regulations specific to rent controlled apartments that are known as the New York City Rent and Eviction Regulations.

RENT STABILIZED APARTMENTS
As stated above, rent-stabilized apartments must be painted or have their walls covered
every three years, or more often when required by contract. This period may be extended to five years provided that (i) the extension is agreed to at least one month before the expiration of the three year period; and (ii) that this is not part of the lease agreement. RSC regulations also forbid landlords from charging a painting deposit or demanding that they contribute to the cost of the painting. There is an exception if the tenant consents in writing to pay for painting services which are not required by law.
In one recent case, Canada Leasing Corp. v. Janeill, the court awarded a 5% abatement because the landlord failed to paint a bathroom ceiling. A tenant can bring an HP action in court to induce landlord compliance with the HMC.
The HMC requires landlords to maintain records showing when the apartment was last painted or covered and who performed the work and HPD may compel landlords to submit these records.

RENT CONTROLLED APARTMENTS
The laws for rent-controlled apartments are somewhat different. Although a landlord is still required to paint the apartment every three years pursuant to the HMC, it is not required under The Rent and Eviction Regulations (the laws governing rent controlled apartments). Accordingly, DHCR cannot order a rent reduction based upon a failure to paint. However, if the landlord’s own prior practice or the lease establishes that painting is an essential service for the rent-controlled apartment, the tenant may apply for a rent reduction based upon decreased service.
Where painting the apartment has not been established as an essential service, the landlord may apply to DHCR for an increase in the Maximum Rent by 1/40th of the cost of painting the apartment. To qualify for this increase the landlord must file an “Owner’s Application for Air Conditioner Charges or for an Increase in Maximum Rent for Painting” with the DHCR (DHCR Form RN-79b, Part B). The landlord must provide evidence going back 10 years to establish that painting was not previously an essential service. Additionally,
the courts have decided in Laren v. Chakranarayan that a landlord may not maintain a Small Claims action in order to recover these costs.

CONCLUSION
Although not always demanded by tenants, under the law, a landlord must paint or cover a rent stabilized or rent controlled apartment at least once every three years. For rent controlled apartments, the landlord may apply to the DHCR to recover the costs of the painting by means of increasing the monthly rent by 1/40th of the cost incurred.

Joseph Moskovits, Esq. is the Managing Attorney at Riverside LT, a firm specializing in landlord-tenant services. He can be contacted at
(718) 705-5454 Ext. 2401 or at josephm@riversidelt.com

Until recently, a building owner or purchaser was relatively safe in defending against a tenant’s rent overcharge allegation if they were able to provide a rent history establishing that the rent charged in the last four years was increased legally. The DHCR was pretty rigid with regard to the four-year statute of limitations, and would not go beyond the four years (the base-date) to determine the legal regulated rent in processing a rent overcharge complaint. However, several recent court decisions have now put that rule in jeopardy.

In Grimm v. DHCR (2009), the NYC Court of Appeals ruled that where an overcharge complaint alleges fraud, the DHCR has an obligation to ascertain whether the rent on the base date is lawful, even where it involves an examination of the rental history earlier than four years from the complaint’s filing.

Unfortunately, the courts did not define fraud, opening up a Pandora’s Box and leaving an owner or potential purchaser completely vulnerable to the unknown. To illustrate the possible ramifications, consider the following scenarios that may arise out of this decision:

•    Many owners have already destroyed all documents more than four years old, based on the four-year rule. If a tenant now files a rent overcharge complaint claiming fraud going back 10-15 years, owners will be unable to reconstruct that rent history.

•    Until now, a prospective purchaser looking to buy a building would need only to review the rent history for the past four years as part of their due diligence. If everything was in order, they could safely assume that the rent roll was legal. Now, the four-year rent analysis will not be adequate.

•    A tenant decides, out of curiosity, to obtain a rent history from DHCR and notices a rent increase in 1989 that was higher than the guidelines would allow. The tenant files a complaint with the DHCR claiming that the owner had committed fraud in 1989, making their current rent an overcharge. It is virtually impossible to defend against such an allegation, and the DHCR is compelled to assess an overcharge, with treble damages, based on the Grimm decision.

•    DHCR issued a rent overcharge order to a prior tenant in 1995. Based on the current four-year rule, a prospective purchaser would not need to concern themselves with that order. Now, however, a tenant may claim fraud because DHCR set the legal rent in 1995, and the owner would need to calculate the legal regulated rent from 1995 forward, rather than limiting the review to the past four years.

To exacerbate the problem, there are now tenant attorneys that are sending mass-mailings to tenants offering to help tenants fight their landlord. One tenant blog encourages tenants to fight their landlords advising them “How to Protect Yourself against a Ruthless, Greedy Landlord” and warning tenants that, “there’s never been a time when your tenancy rights have been more dangerously threatened with extinction.” If only that were true!

The facts are that the Rent Regulation Laws are set to expire this year. Assembly Democrats have a powerful lever at their disposal to get a better deal for tenants this time around. Even Republicans want to keep the rent laws intact, so as to be able to benefit from such programs as the 421a tax abatements, which spur new apartment building development.

Before leaving office, former Governor David Paterson introduced legislation to amend the Rent Laws. This legislation would include increasing the High Rent Vacancy/High Income threshold from the current $2,000 to $3,000. The governor did not say how that would affect apartments that are already deregulated, but whose monthly rent is less than $3,000.

Another detail of the legislation would be to change the way MCI increases are implemented. Currently, an MCI increase is permanently added to the rent. The legislation seeks to limit the increase to the time it takes for the landlord’s costs to be reimbursed. After that, the MCI increase would be removed from the rent, and the legal rent would decrease.

All in all, rent regulations are not going away anytime soon. Even though Governor Paterson is no longer in office, let’s not forget that it is our current Governor’s father who created the DHCR.
So what’s an owner/prospective purchaser to do?

Although the courts have not yet clarified what would constitute fraud, they have stated that if a tenant does not claim fraud, an owner cannot be required to produce records going back more than four years from the filing of a complaint. A tenant must provide a “compelling reason” to allege fraud. Thus, the tenant simply writing that they think that the current rent was calculated by fraud would not necessarily trigger a fraud investigation. However, there is no clear standard or definition as to what would trigger the DHCR’s obligation to investigate the fraud claim.

Taking everything into account, there is not much that a current owner could – or should – do at this point. If an owner receives a rent overcharge complaint wherein a tenant alleges fraud, an owner would be best advised to contact a competent attorney or consultant proficient in rent stabilization law.

A prospective purchaser would need to be more diligent in reviewing a building’s rent history before purchasing a building. Purchasers need to remember that they are buying a rent roll, not just a structure. Before signing on the dotted line, always make sure your rent roll is legal.

Joseph Lamet is a consultant specializing in Rent Stabilization Law.  He can be reached at (718) 854-1096, or at joelamet@gmail.com.

Typically, Presumed Lead violations are issued by inspectors from the HPD Lead Unit when they cannot gain access to the apartment in order to confirm a previous inspector’s report of peeling or deteriorating paint. Interestingly, these original inspections are most often conducted because the tenant called 311 to complain about something completely unrelated to paint, let alone lead paint. That means that property owners are at risk of receiving Presumed Lead violations each time an inspector enters an apartment.

One piece of good news for owners is that HPD cannot simply presume the presence of lead paint wherever there is peeling paint. The guidelines for presumption of lead are clearly defined in the New York City Childhood Lead Poisoning Prevention Act of 2003, also known as Local Law 1 of the year 2004, which states, “In any multiple dwelling erected prior to January 1, 1960, it shall be presumed that the paint or other similar surface-coating material in any dwelling unit where a child of applicable age resides or in the common areas is lead-based paint.” Originally, this law only applied to apartments with children under the age of seven, but it was revised in 2006 by the Board of Health to now apply to children under the age of six.

Therefore, if an HPD inspector walks into a building built before 1960 to inspect an apartment- for any reason- they are required to ask the tenant whether there is a child under six living in the apartment. If there is, they are then required to conduct an apartment-wide examination to look for peeling paint or damaged surface coating and schedule a lead inspection if they find any.

CONTESTING A PRESUMED LEAD PAINT VIOLATIONS
The first, and perhaps most obvious, thing to do is confirm that the building was in fact built before January 1, 1960. This may sound silly but HPD has erroneously issued Presumed Lead violations to owners of buildings that were in fact built after this date. In such a case, the owner or manager can simply submit a copy of the building’s Certificate of Occupancy along with a completed owner’s contestation form which is mailed out with every Presumed Lead violation.

If the building was built before 1960, as is the case with an overwhelmingly large number of multiple dwellings in NYC, all is not lost. The Presumed Lead violation can still be contested by proving that the area in question does not contain dangerous levels of lead. To do this, an EPA certified firm must be hired to test the area specified by the violation using an XRF gun. Moreover, the person conducting the inspection must also be certified by the EPA and must have undergone training in the proper operation of the XRF gun.

To qualify, the tested area must not contain lead levels greater than one milligram of lead per square centimeter as measured by the XRF Gun. If the test results using the XRF are inconclusive, (which can often occur on metal surfaces,) HPD allows confirmation by laboratory analysis of paint chips.

If the results indicate acceptable lead levels fill out the contestation form, attach documentation from the inspection company (which should include a report from the inspector, an affidavit and certification), and ensure that the paperwork is received by HPD at least six days prior to the correction date specified on the violation. When HPD receives the appropriate paperwork indicating the lead levels are within the permissible limit, the violation will be downgraded to an Order 556 or 554, otherwise known as a simple “Paint and Plaster” violation.

The contestation process may be quite paper intensive and require you and your team to move relatively quickly to get the testing done and the paperwork submitted on time. Not doing it, however, means that every Presumed Lead violation becomes a real Lead offense along with all the costly abatement, even more paperwork, fines and potential litigation that a Lead Class C Immediately Hazardous violation carries.

AVOIDING PRESUMED LEAD VIOLATIONS ALTOGETHER
While contesting a Presumed Lead violation may be a smart move once you get a violation, ensuring you never get the violation in the first place is always the best way to go. The risk of getting any lead violations can be greatly reduced by inspecting apartments regularly and making sure there are no cracks in the walls or peeling paint around windows and doors. Correcting conditions such as leaky pipes, sinks, and radiators can help avoid peeling paint altogether.

There is, however, a more proactive option to help completely avoid lead violations. HPD allows owners to apply to have their buildings entirely exempt from receiving lead violations by pre-testing them for lead using an XRF gun. As long as specific testing protocols are followed, an individual unit or building can obtain an exemption if it is found to be free of lead-based paint. Exempting an apartment can not only save you time and money, but can also save you the hassle of dealing with the new EPA RRP Rule (See Inset)

While this may seem like a godsend, going through the process is not simple, and it is important to weigh the cost and short-term headache against the long-term benefits before initiating this, or any, process. While not as expensive as full lead abatement, XRF testing must be conducted by certified professionals, which can cost several hundred dollars- and can take up to an hour- per apartment. The findings need to be compiled into an extensive report, which includes a list of all surfaces tested along with a summary of any components found to contain lead-based paint.

However, the long-term value in exempting a building is obvious. No more worrying about Lead violations, let alone Presumed Lead violations, and compliance with the EPA’s RRP Rule whenever doing any renovations in your building, may in fact be worth the one time hassle.

Whether you go through the exemption process or prefer to handle lead issues and compliance as they come up, it is important to remember that Presumed Lead violations are still issued en-masse by HPD, often based on the assumption that the paint in the pre-1960 building must contain lead. If you and your team are prepared and can react quickly enough, these can be resolved without much cost or headache.

Jack Zucker is the CEO of XRF Lead Services, Inc. and can be reached at (718) 677-6002 or jack@xrfservices.com

Surprisingly, many property owners forget to reap the rewards of a cost segregation study until the moment the tax bill arrives, while others are not even aware of the concept. Fortunately, it is not too late for you to take advantage of these benefits.

CASE IN POINT
In 2010, a building owner with many residential developments was referred to our firm by their accountant. With year end approaching, the client realized that they would have a large tax bill to offset and asked us to perform a cost seg study on a large property in their portfolio. The $11 million property, a 154-unit residential development in New York, was purchased in 2006, which required us to perform a retro (look-back) study with a 481(a) adjustment of over $1M.

To perform a detailed analysis, we worked collaboratively with the clients’ staff to examine the building’s many components and systems. As per the IRS audit techniques guide, engineers visited the building and conducted a site tour, compiling photographs and detailed notes. Once the data was collected, it was then analyzed to identify the assets eligible for accelerated tax depreciation and accurately determine their value. Finally, the engineering and tax components of the cost segregation study were integrated, combining the vast amount of information into one document.

A SIZABLE TAX SAVINGS
The clients were excited by the results. The building’s total cost was $11,000,000. Of this, the cost segregation study permitted $2.2 million, or 19%, to be reclassified from 27.5-year to 5-year MACRS (Modified Accelerated Cost Recovery System) property. 9 percent, or $1M, was reclassified to 15-year MACRS property. This reclassification of assets resulted in a Net Tax Benefit of over $700,000 in the first year. This included any assets eligible for the 50% Bonus Depreciation.

Since the results of a cost segregation study depend upon accurate accounting and engineering evaluations, which is not something a typical CPA firm is equipped to handle, CPAs and accountants typically prefer to refer their clients Madison SPECS’ experienced, qualified cost seg specialists.
The tax benefits that emerge may vary in size, but they all go to building a better bottom line.

Eli S. Loebenberg, CPA is CEO of Madison SPECS LLC, ,a division of Madison Commercial Real Estate Services, LLC, which offers nationwide specialty services for the commercial real estate market. For more information, call 866-500-Madison.

Worse yet, the scope of the tenant’s activities is totally unknown. She could be performing a “gut renovation,” which may entail the demolition of interior walls or other actions that could compromise the structural integrity or present a real fire or safety hazard to other tenants in the building. In addition, the unauthorized renovation work, often performed without securing any permits from the Department of Buildings, may result in the imposition of a violation on the building itself, leading to possible fines and penalties.

Certainly, an eviction proceeding could be brought against such a tenant in Housing Court, for breaching a substantial obligation of the tenancy, assuming the construction work is somewhat substantial. Such an eviction proceeding would be predicated upon the service of a Notice to Cure the violation of the substantial obligation of the tenancy. Typically, the Notice to Cure would specify the provisions of the lease being violated, and would set forth a time period proscribed by the lease, in which the tenant could cure the alleged violation.

But this poses a problem for the landlord. What if the tenant continues to perform the renovation work in her apartment even after the service of the Notice to Cure? The tenant may erroneously believe that she could finish her renovation project within the cure period, then sit back and tell the landlord that she is no longer performing construction or demolition work within the apartment. The service of a Notice to Cure, and the subsequent service of a Petition to commence a summary eviction proceeding may not stop the tenant from continuing to perform the unauthorized work in the apartment.

The landlord therefore needs a mechanism to stop the tenant immediately, lest he risk the aforementioned health and safety hazards to other tenants in the building, as well as being subjected to fines from the City of New York. Only the Supreme Court has the authority to issue equitable relief, in the form of an injunction, to stop the tenant. Housing Court does not have the authority to issue such injunctive relief.

Thus, even prior to the service of the Notice to Cure, which is the precursor to an eviction proceeding, the landlord could file an Order to Show Cause in the Supreme Court, seeking an order stopping the tenant from performing any further construction or demolition work in her apartment. Incorporated within the Order to Show Cause would be a temporary restraining order (“TRO”) that immediately stays any further work in the apartment.

Finally, it is important for the TRO to be carefully worded, so that it will not jeopardize the maintenance of a subsequently commenced eviction proceeding. Such a scenario occurred in the case of Nunz Equities v. Mangan (2007). In that case, the tenant completely gutted her kitchen, and installed new cabinets, flooring and appliances without having obtained any permission from her landlord. The landlord, discovering the tenant’s work in her apartment, and not knowing what the tenant’s scope of that work would be, obtained a comprehensive, broadly-worded TRO in the Supreme Court, enjoining the tenant “from performing, or causing and/or allowing to be performed, any alterations, construction, and/or demolition work in the premises, and from committing further waste therein.”

Thereafter, the landlord commenced a holdover proceeding against the tenant based upon the unauthorized construction and demolition work in the apartment. The Court, however, held that the language of the TRO was inconsistent with the language of the Notice to Cure upon which the holdover proceeding was predicated. On the one hand, the TRO stopped the tenant from performing any further alterations within the premises. On the other hand, the Notice to Cure said that the tenant must “cure” the alterations work that was done. Thus, the Housing Court dismissed the holdover proceeding, stating as follows:

In other words, respondent [the tenant] was told by petitioner [the landlord] to put all of the removed cabinets, appliances, and plumbing back the way they had been, only to be told by the Court, three days later, at petitioner’s urging, that she was enjoined from taking such action.

A reasonable layperson confronted with the instant TRO would read it to mean that all work at the apartment must cease. When confronted with a landlord’s notice to cure and a contrary court order, a prudent individual would abide by the court order. Here, respondent was told to cure by the landlord and told not to cure by the Court. Petitioner’s TRO cut respondent’s cure period to three days, less than what was required under the Rent Stabilization Code. Therefore, this court finds that respondent was not given a 10-day opportunity to cure the alleged lease violations, and, thus, petitioner has not satisfied the requirements of Rent Stabilization Code (9 NYCRR) 2524.3 (a) and this proceeding must be dismissed.
On appeal, the Supreme Court, Appellate Term affirmed the Housing Court’s dismissal.
So what exactly should a landlord do in such a situation? A broadly worded TRO is still desirable, since that would stop whatever the tenant intends to do within the apartment. Yet, as we saw in the Nunz Equities matter, the TRO should not impinge upon the tenant’s ability to “cure” the alleged wrongful construction work. Parenthetically, it seems somewhat odd that the Court in the Nunz Equities case apparently considered the tenant’s unilateral restoration of the apartment to its former condition – no doubt entailing even more construction work without landlord supervision – to be the appropriate “cure” for her prior, unauthorized construction and demolition work, rather than landlord-supervised restoration work, which would insure the use of licensed contractors.

In any event, to avoid the outcome that occurred in the Nunz Equities case, the language of the TRO should explicitly state that nothing contained within the TRO is intended to affect the tenant’s obligation to “cure” a breach of the lease, as set forth in any contemporaneously served Notice to Cure, and that the TRO is served upon the tenant without prejudice to the service of the Notice to Cure.

Edward Alper, Esq. is the principal of the Law Offices of Edward Alper, and has practiced real estate litigation since 1982. He can be reached for consultation at (212) 359-9386 or ealper@alperlawfirm.com.