Full Text
Performance Audit of the City’s Demolition Procedures and Practices Audit Report June 2017 Leif Chief City Auditor Office of Audit and Control C I T Y O F A L B A N Y ---PAGE BREAK--- Audit Team Leif Chief City Auditor, CIA, CGAP Aindrea Richard, Analyst Samuel Fein, Analyst A full copy of this report is available for download at our website: www.albanyny.org /Government/CityOfficials/AuditandControl. You may also contact our office by email at OAC maintains an inventory of past audit report copies and we encourage you to return any unwanted hardcopy reports to our office to help us save on printing costs. Please mail to: City Hall, Office of Audit and Control, Room 111, 24 Eagle Street, Albany, NY 12207. Alternative formats are available upon request. Please call (518) 434-5023 ---PAGE BREAK--- 3 PREFACE The Office of Audit and Control exists to provide oversight, transparency and public accountability as a means to improve City services. This performance audit is a part of that function. When the Office of Audit and Control takes on an audit client and, absent evidence of misconduct, that client addresses the audit’s findings; it is our commitment to support and encourage their use of the audit process to improve their operations. This audit was conducted with the full cooperation of the Department of Buildings and Regulatory Compliance and the Director has committed to addressing its findings. The proper use of the audit findings in these circumstances is to provide for oversight of the resulting changes and as the basis for informed public policy discussions. Given that the Department of Buildings and Regulatory Compliance has given their full cooperation, it would be unfair and damaging to the audit process for this audit’s findings to be used for political gain. As such, the Office of Audit and Control will view the political use of this audit’s findings as detrimental to our mission. We thank the Department of Buildings and Regulatory Compliance for their cooperation and commitment. ---PAGE BREAK--- Table of Contents Executive Summary 1 Introduction 3 Scope, Objectives and Methodology 5 Audit Results 8 Finding 1- The Department’s procedures for responding to potentially dangerous structures contain instructions for emergency demolition but do not contain a pathway for other options. 8 Finding 2- The Department has not recently conducted an assessment of the City’s vacant and potentially dangerous structures to determine which should be prioritized for demolition versus stabilization. 9 Finding 3- The City has not utilized its non-emergency stabilization and demolition powers to prevent buildings that are unfit for human habitation from becoming an immediate danger to the public health and safety. 10 Management Response Appendix 1-A ---PAGE BREAK--- 1 Executive Summary This audit reviewed the City’s demolition processes and concluded that Albany is not utilizing important tools it has to manage and resolve vacant and abandoned building issues. While the City has the power to stabilize or demolish vacant buildings outside of an emergency situation, the most common course of action is to wait until a structure is an immediate danger to public health and safety and then order its demolition. Vacant and abandoned buildings drive down the value of the surrounding properties, are attractive nuisances for criminal activity, and they demoralize a neighborhood’s efforts to maintain its public spaces. Vacant buildings also create the likelihood of additional vacant buildings. For these reasons, the City should utilize its non-emergency powers to act systematically to address the issue. The Office of Audit and Control (OAC) recommends that the City begin utilizing the powers granted by State and City laws to resolve the issues with vacant properties before decisions have to be made in an emergency situation. However, before those non- emergency tools are utilized, the City should engage stakeholders including neighborhood associations and Historic Albany Foundation in doing an assessment of the vacant properties in order to prioritize them for stabilization, rehabilitation, or demolition. This assessment should be used to direct the City’s non- emergency stabilization and demolition powers to resolve large portions of the vacant building inventory. With the creation of the Neighborhood Stabilization Coordinator position and the enactment of recent state laws, the Department of Buildings and Regulatory Compliance has the ability to conduct this assessment and make it effective. In most cases, the cost of these activities would be rolled onto the property’s tax bill, which would frequently put the property into default and eventually make it available for the Land Bank’s programs. As part of this audit, OAC reviewed the City’s emergency demolition activities and found that the City does, with rare exceptions, follow its written procedures and City and State laws for emergency demolitions. Unfortunately, the City’s procedures only provide guidance for emergency demolitions but do not include other available options, including emergency stabilization, non-emergency demolition, and non-emergency stabilization. The City should write procedures for these options, do the assessments With rare exceptions, Buildings and Regulatory Compliance meets its reporting requirements, and follows City and State laws when conducting emergency demolitions. However, Albany is not utilizing important tools it has to manage and resolve vacant and abandoned building issues. City should begin utilizing the powers granted by State and City laws to resolve the issues with vacant properties before decisions have to be made in an emergency situation. ---PAGE BREAK--- 2 mentioned above, and utilize these tools so that demolition decisions are not made on an emergency basis. This audit also reviewed the amount of overtime accumulated by one inspector, Dan Sherman, who earned more overtime in 2016 than his annual salary. He is also the Building inspector for the Town of Knox. To date OAC has not identified any evidence that there was misconduct involved. In attempting to determine whether he charged the City and the Town for the same time worked, OAC experienced a data limitation because the Town of Knox has no records of the dates or times that Mr. Sherman worked or conducted inspections. OAC is exploring other methods of examination and will issue an addendum to this report when more information is obtained. ---PAGE BREAK--- 3 Introduction This audit was initiated because of the recent increase in the number of emergency demolitions ordered by the Department as well as one individual inspector earning more overtime in 2016 than his annual salary and far more overtime as compared to other overtime-eligible staff. The primary objective of the audit was to determine whether the Department follows City and State laws and its own procedures when it initiates emergency demolitions. OAC determined that, with very few exceptions, it does. In addition to exploring that objective, OAC examined whether the Department’s procedures are adequate and whether it is being effective in its efforts to address the vacant and abandoned building issue in the City. OAC staff determined that the Department is lacking procedures for emergency stabilizations, non-emergency demolitions, and non-emergency stabilizations. Using these tools, the City can bring resolution to many of the vacant structures that are salvageable but need stabilization to prevent further deterioration or that are too far gone and need to be demolished. While the audit did not examine any individual demolition decision, 119 of the 125 emergency actions were demolitions and there were no non-emergency City-ordered demolitions or stabilizations. While we cannot determine whether having the additional procedures would change those results, considering all practicable options is an important part of decision-making and an option is less likely to be considered when it has no written procedures. The audit findings are as follows: 1. The Department’s procedures for responding to potentially dangerous structures contain instructions for emergency demolition but do not contain a pathway for other options. 2. The Department has not recently conducted an assessment of the city’s vacant and potentially dangerous structures to determine which should be prioritized for stabilization versus demolition. 3. The City has not utilized its non-emergency stabilization and demolition authority to prevent buildings that are unfit for human habitation from becoming an immediate danger to public health and safety. The Department is lacking procedures for emergency stabilizations, non-emergency demolitions, and non-emergency stabilizations. Considering all practicable options is an important part of decision-making and an option is less likely to be considered when it has no written procedures. ---PAGE BREAK--- 4 Data Limitation: This audit also reviewed the amount of overtime accumulated by one inspector, Dan Sherman. In 2016, Mr. Sherman earned $65,166 in overtime on a base salary of $48,486. The overtime total is also far more than the overtime earned by any other Department employee. The explanation given by the Department is that he was more willing than others to take on- call shifts. The Department also explained that due to staffing shortages, he was one of two acting supervisors during this period and that a supervisor is required at the scene of a potential demolition. The City’s records that OAC has examined to date do not show anything to refute this explanation. The Department now has three supervisors and Mr. Sherman is not one of them. However, he does continue to earn more in overtime than he does with his base salary. Mr. Sherman is also the building inspector for the Town of Knox. OAC staff submitted a FOIL request for the Town’s records of his time worked including time and/or date of his inspections for the Town. We have been informed that these records do not exist. This is a limitation on our audit and we are exploring other options to examine Mr. Sherman’s overtime. We will issue an addendum to this report when we have additional information. In the public interest, we have decided to move forward and publish this audit report without final conclusions on this issue. ---PAGE BREAK--- 5 Scope, Objectives and Methodology Objectives: The objectives of this audit were as follows: 1. Determine whether the City is following its internal policies and procedures when determining that a structure must be demolished on an emergency basis. 2. Determine whether the City is following all legal and external (County, State, Federal) requirements when determining that a structure must be demolished on an emergency basis. 3. Determine whether the City is following best practices in making emergency demolition decisions. 4. Determine why the City has paid one employee more in overtime than his base salary. Determine whether the Department is meeting its reporting requirements with regard to vacant buildings and demolitions. Scope: This audit covers the demolition decision-making process and the overtime allocation process for the Department. The time frame covered for demolitions and overtime will be 2015 and 2016. Methodology: The overall audit methodology consisted of the following: Evaluating and reviewing the Department’s written procedures and practices related to the demolition of hazardous structures. Researching and reviewing New York State law, City of Albany law, and New York State case law related to the demolition of hazardous structures, and comparing these laws to the Department’s written procedures and practices. Collecting, reviewing, and evaluating the Department data and documentation. Conducting meetings and interviews with personnel from the Department and personnel from the City’s Law Department. 1. In order to determine whether the City is following its internal policies and procedures when determining that a structure must be demolished on an emergency basis; This audit covers the demolition decision-making process and the overtime allocation process for the Department. The time frame covered for demolitions and overtime will be 2015 and 2016. ---PAGE BREAK--- 6 The audit team reviewed the Department’s document titled, “Emergency Demolitions Procedures Summary” and created a flow chart and a spreadsheet containing all steps from the document. While this document is specifically for emergency demolitions, the Department confirmed that there are no written procedures for other paths of action. The audit team then compared documents and spreadsheets provided by the Department with the OAC created flow chart and spreadsheet, and made note of any areas where procedures were not followed. 2. In order to determine whether the City is following all legal and external (County, State, Federal) requirements when determining that a structure must be demolished on an emergency basis; The audit team conducted extensive research on laws related to emergency demolitions and stabilizations and the taking of hazardous structures by a municipality. The team also consulted with attorneys in the Law Department. Most analysis was of City of Albany law, New York State law, and New York State case law. The audit team created multiple documents summarizing these laws and compared these laws to the Department’s written procedures and practices, including the OAC created flowchart, spreadsheets created by OAC, and data and documents provided by the Department. 3. In order to determine whether the City is following best practices in making emergency demolition decisions; The audit team reviewed the Department’s written procedures and practices, laws related to emergency demolitions and stabilizations, and data and documents provided by the Department, as well as all documents created by the audit team to determine ways in which the Department’s practices could improve. The audit team also considered the multiple available procedures for demolishing or stabilizing vacant structures that are prescribed in City and State law. 4. To determine why the City has paid one employee more in overtime than his base salary; The audit team analyzed the Department’s written demolition procedures to determine if written procedures played a part in demolitions being conducted during overtime hours. During meetings with the Department, the audit team made multiple inquiries related to the office structure, job responsibilities, complaint response time, and staffing process for demolitions. The audit team also submitted a FOIL request to the Town of ---PAGE BREAK--- 7 Knox for Inspector Dan Sherman’s inspection schedule for his job with the Town of Knox in an attempt to compare the schedule to the City of Albany’s time sheets. 5. In order to determine whether the Department is meeting its reporting requirements with regard to vacant buildings and demolitions; The audit team reviewed data and documents provided by the Department, requested additional information during meetings with the Department, and consulted with other City Departments such as the Assessor’s Office. ---PAGE BREAK--- 8 Audit Results Findings: 1. The Department’s procedures for responding to potentially dangerous structures contain instructions for emergency demolition but do not contain a pathway for other options. The Department’s written procedures for responding to potentially dangerous structures should include all likely options provided by City and State law, including emergency demolition and stabilization, non-emergency demolition and stabilization, and other code enforcement actions. The Department’s Emergency Demolition Procedures Summary document contains a detailed set of procedures, starting with receiving an initial complaint through the demolition and payment process. However, these procedures lead to only one path of action: emergency demolition. The written procedures do not include instances where the Department may make the determination that a building is not “a direct hazard or an immediate danger to the health, safety or welfare of the occupants of a building or of the public.” This lack of inclusion of other viable courses of action makes it less likely that the Department employees, when responding to potentially dangerous structures, will consider courses of action other than emergency demolition. Of the 125 emergency actions taken in 2015 and through December 22, 2016, 119 were emergency demolitions, three were emergency stabilizations, and three were emergency demolitions of porches, which the Department categorizes as stabilizations. To be clear, we have not done an assessment of any individual emergency demolition decision and are not suggesting that any of these demolitions were inappropriate. Recommendation: Write new procedures for responding to potentially dangerous structures. The new written procedures should include five potential paths that could occur as a result of the Department inspecting a potentially dangerous structure. The five potential paths are: 1. Emergency Demolition as a result of an “immediate danger to the health, safety…” (Detailed in City of Albany Code §133-55) Written procedures for responding to potentially dangerous structures should include all likely options ---PAGE BREAK--- 9 2. Emergency Stabilization as a result of an “immediate danger to the health, safety…” (Detailed in City of Albany Code §133-55) 3. Demolition as the result of a “hazard to the health or safety…” (Detailed in City of Albany Code §133-28) or “unfit for human habitation” (Detailed in City of Albany Code §231-120 through §231-123). 4. Stabilization as the result of a “hazard to the health or safety…” (Detailed in City of Albany Code §133-28) or “unfit for human habitation” (Detailed in City of Albany Code §231-120 through §231-123). 5. No city mandated demolition or stabilization/all other codes enforcement actions. Written procedures should also include requirements for contacting property owners before conducting demolitions. In cases where emergency measures are taken, written procedures should require the Department to call the property owner before the demolition takes place when possible. In cases where demolitions or stabilizations take place that are not conducted in an emergency manner, then contact must be made with the property owner, as State and City law require the property owner to be notified and be provided with the opportunity to be heard. 2. The Department has not recently conducted an assessment of the City’s vacant and potentially dangerous structures to determine which should be prioritized for stabilization versus demolition. The Department should take a strategic and systematic approach to managing and addressing the City’s vacant and potentially dangerous structures. The City has the power and means to take action when it comes to vacant properties and should not use emergency demolitions as the primary tool for dealing with the City’s vacant building issue. The Department regularly makes decisions on whether or not to stabilize a structure, demolish a structure, or take some other course of action without knowledge of an existing assessment of the priority of the structure in regards to demolition versus stabilization. Having access to this information would allow the Department to make more informed decisions in emergencies. The Department should use the assessment on the priority of structures to initiate the use of the city’s non-emergency powers to demolish and stabilize buildings that are unfit for human habitation. The Department should take a strategic and systematic approach to managing and addressing the city’s vacant and potentially dangerous structures. ---PAGE BREAK--- 10 By not having access to information on a structure’s priority in regards to stabilization or demolition, the Department is forced to make important decisions affecting an individual or entity’s property and potentially the overall makeup of a neighborhood with limited information. Since many of these actions are emergency measures, decisions on whether to stabilize or demolition a structure often must be made very quickly. These time constraints make it even less likely and more difficult for the Department to evaluate criteria such as the historical value of the structure. The lack of an assessment on the priority of structures to stabilize or demolish may also be a barrier to the Department developing an overall plan for the vacant buildings and potentially dangerous structures in the city. An assessment would allow greater ability to develop a systematic plan for resolving the issues with these structures. While conducting an assessment that prioritizes vacant and potentially dangerous structures would involve a significant time commitment, the issue will not be resolved without it. Recommendation: Conduct a city-wide assessment of all of the City’s vacant and potentially dangerous structures and prioritize the structures for stabilization, demolition, or other action. A set of criteria should be developed that includes factors such as the historic value of the structure, cost of stabilization and rehabilitation, potential monetary value of the structure, and importance of the structure to the neighborhood. Work with impacted neighborhood associations, the Historic Albany Foundation, the Albany County Land Bank, and other stakeholders in conducting the assessments. When developing new written procedure related to responding to potentially dangerous structures, the procedures should factor a structure’s priority for stabilization or demolition into its decision-making process. 3. The City has not utilized its non-emergency stabilization and demolition powers to prevent buildings that are unfit for human habitation from becoming an immediate danger to public health and safety. The Department should proactively use powers given to it by both City and State law to conduct non-emergency demolitions and stabilizations. In 2015 and 2016, the Department did not conduct any non-emergency demolitions or stabilizations. Within City of Albany Code there are three different laws allowing the City to order action to repair or demolish The City should not wait until a property is an immediate danger to public safety before taking action. It is better to make evaluations and decisions outside of emergency situations. ---PAGE BREAK--- 11 hazardous structures and each law provides the City with a different mechanism for doing so. §133-55, which is most commonly used by the Department, details procedures for emergency demolition and stabilization. §133-28 and §231-120 through §231-123 detail the process for non-emergency demolition and stabilization. §133-28 provides a process in which the Director of the Department can make an order to demolish or repair a structure in instances where, “by reason of its use, mode or construction or which upon the demolition of an adjoining building shall be discovered to be unsafe or shall be determined to be unfit for human habitation or is a hazard to the health or safety of the occupants or public.” The law requires the city to give the parties in interest a written or printed notice and a reasonable opportunity to be heard. §231-120 through §231-123 provides a process in which the Director of the Department can make an order of intent to demolish or repair a structure in instances where the Director “designates a building unfit for human habitation, as provided in this code, and determines that the cost necessary to correct the violation is not reasonably related to the value of the building.” This law requires the city to give the property owner the opportunity to demolish or repair the structure and if the property owner does not comply, the Department can take action. Both §133-28 and §231-120 through §231-123 are similar tools that the Department could use to address the City’s vacant building problem. Unlike §133-55, these laws are for instances in which there is not an “immediate danger,” and also allow for notice and greater input from the property owner and public. By ignoring available non-emergency stabilization and demolition powers, the City is missing opportunities to repair or demolish buildings which have structural deficiencies but do not yet require “immediate action.” This may result in buildings that could be rehabilitated eventually requiring demolition. A proactive use of non-emergency stabilizations and demolitions could help the City manage and improve the vacant building issue in the long run. Recommendation: Develop a proactive strategy for addressing vacant and potentially dangerous structures buildings that includes ordering and/or performing non-emergency stabilizations and demolitions. A vacant building should not sit indefinitely with the ---PAGE BREAK--- 12 Department taking no action if there is an action in the Department’s toolbox that could resolve the building’s situation. This proactive strategy should be used in conjunction with the recommended city-wide priority assessment conducted with the input of community stakeholders. ---PAGE BREAK--- 13 APPENDIX 1-A Management Response ---PAGE BREAK--- 14 ---PAGE BREAK--- 15 ---PAGE BREAK--- 16 ---PAGE BREAK--- 17 ---PAGE BREAK--- 18 ---PAGE BREAK--- 19 ---PAGE BREAK--- 20 ---PAGE BREAK--- 21 Auditor’s Response ---PAGE BREAK--- 22 CITY OF ALBANY Office of Audit and Control 24 Eagle Street Albany, NY 12207 [PHONE REDACTED] [PHONE REDACTED] (FAX) 6/13/2017 Dear Director Magee, We appreciate your response to our audit report and appreciate your willingness to implement our recommendations. We also appreciate your statement that you plan to work toward overcoming the obstacles you identified in implementing our recommendations. We do want to clarify that we believe the obstacles are not as daunting as you anticipate. Vacant buildings are a major blight in this City. As such we believe that you will be surprised at the level of political and public support a well-planned, aggressive initiative would receive. Our analysis is as follows: You identified making contact with property owners as an obstacle to implementing the recommendations. It’s important to note that the inability to find an owner does not prevent the City from taking non-emergency action to repair a problem that caused the City to declare a structure unsafe-unfit. If the City makes adequate efforts to contact the owner (including checking Assessor’s records, County Clerk records, google, etc.) the City can hold a publicly noticed hearing and move forward with the repairs or demolition, even without successfully contacting the owner. This would allow the City to quickly return the property to being potentially occupied, or at least prevent it from deteriorating. If the bill is unpaid, it will be attached to the property taxes and the County will eventually foreclose on the now occupied property that still retains value. You mentioned that the Department has encountered potentially dangerous structures countless times without activating emergency demolition or stabilization procedures, issuing 1,067 unsafe-unfit for human habitation citations in 2015 and 2016. We recommend that an unsafe-unfit declaration trigger an aggressive process to remove this status. The property owner should be ordered to take action on the property. If the owner does not take action, the City can conduct non- emergency repairs or demolition (after a hearing). As noted above, this is true even if efforts to contact the owner are unsuccessful. In addressing Finding 3, you made many points about procedural obstacles to increasing non- emergency stabilizations and demolitions. We agree that that these factors should be taken into consideration. However, the procedural work associated with these issues should not stand in the way of conducting more non-emergency actions. Additionally, we question whether non-emergency ---PAGE BREAK--- 23 stabilizations would necessarily require more overtime, as non-emergency stabilizations would not require Department staff member to be on site during the entire process (no imminent danger to public safety). On page 5, you stated that stabilizing a structure could be viewed as unfair by City residents, as they would not want tax money used on a property with a negligent owner. We believe this concern is misplaced. The costs of non-emergency stabilizations would be billed to the owners as described in the City Code. If a property owner pays the bill, there would be minimal costs to the City. If the owner does not to pay the bill, it would roll onto their property taxes. In due time, the owner would lose his or her property to County foreclosure, meaning that the property owner gets no benefit from the stabilization and the property gets a more responsible owner. You also mentioned that there is no guarantee stabilization will save a building or prevent the need for demolition. This is true, but repairing or stabilizing a building, particularly an important one, makes it much more likely to be rehabilitated. You also mention that buildings often go into a legal limbo after stabilizations are made. We do not agree with the assertion that this legal limbo should be considered an obstacle in the rehabilitation of a building, as this legal limbo is temporary. After about three to five years of taxes not being paid, the County will foreclose on a viable building and the stabilized building will likely be transferred to the Land Bank where a strong effort can be made to sell and rehabilitate the building. Thank you for your commitment to achieving the recommendations identified in this audit. We stand ready to help as you move forward. Sincerely, Leif Chief City Auditor