Audit Report on the Landmarks Preservation Commission’s Issuance of Certificates of No Effect

Executive Summary

The objective of this audit was to determine whether the Landmarks Preservation Commission (LPC) processes Certificates of No Effect (CNEs) and Expedited Certificates of No Effect (XCNEs) in a timely manner.

LPC is responsible for protecting the City’s architectural, historic and culturally significant buildings and sites by granting them landmark or historic district status and by regulating the properties and districts that receive such status.  There are currently 1,364 individually designated landmarked properties and more than 35,000 properties in 139 historic districts and historic district extensions in the five boroughs.

LPC helps preserve the City’s landmarked properties by regulating changes to their significant features.  Owners or tenants must apply for a permit from LPC before doing certain kinds of work affecting the exterior and/or interior of landmarked properties.  When proposed work on a landmarked property requires a Department of Buildings (DOB) permit but does not affect the protected architectural features of a building, the owner or tenant must obtain a CNE permit from LPC prior to getting a work permit from DOB.  Certain kinds of interior work at an individual landmark or building within a historic district may qualify for an expedited permit, or XCNE.  Unlike some other types of LPC permits, CNEs (and XCNEs) do not require a public hearing before the LPC commissioners or a presentation to the community board.

Applications are entered into LPC’s Permit Application Tracking System (PATS) database.  LPC’s stated goals are to issue a CNE permit within 10 days of receiving a complete application and issue an XCNE permit within two days of receiving the application.  According to the September 2015 Mayor’s Management Report (MMR), LPC received 13,273 work permit applications in Fiscal Year 2015.  The MMR states that during that year, LPC issued 91 percent of the CNEs within 10 days.  The MMR further reports that the LPC issued 90 percent of the XCNEs within two days.

Audit Findings and Conclusion

The audit found that LPC does not record the actual dates that the certificates are issued.  As a result, we were unable to determine the degree to which it processed CNEs and XCNEs in a timely manner.  Although LPC’s PATS database has a field called “issue date” that it uses to calculate timeliness, we found that the “issue dates” recorded in PATS generally reflect the date on which a certificate was submitted for internal supervisory approval, which is not how the LPC defines the “issue date.”  Rather, LPC defines “issue date” as the date the final approved permit is printed for mailing.  LPC does not maintain any evidence of this date, however.  According to LPC officials, the permits are supposed to be mailed within one or two days after being printed.  However, the date mailed is not a required field in PATS and is not consistently documented.  Thus, we were not able to determine the degree to which LPC mailed permits in a timely manner.

In addition, we identified weaknesses in the permit issuance process and serious control weaknesses with LPC’s database.  Specifically, the database LPC uses to process permits has inadequate data input controls, edit checks, and audit trails.  This means that management’s ability to ensure that the data in PATS is accurate and that no unauthorized entries are made in the system is compromised.

Further, we identified weaknesses in the application review process that LPC uses to designate an application as being complete.  We found instances where permits remained in process for excessive periods of time and instances where LPC failed to send timely notifications to applicants who had submitted incomplete applications.  We also found little evidence that violation searches were conducted.

Finally, we found that LPC does not reconcile the permit fees collected by DOB with the permits LPC has issued and that the City does not consistently enforce the requirement that a fee be collected for each LPC permit issued.

Audit Recommendations

Based on the audit, we make 16 recommendations, including:

• LPC should ensure that the permit “issue date” field in PATS is updated to reflect the actual date that permits are printed for issuance.
• LPC should document and monitor the dates on which the permits are actually mailed to the applicants to ensure that they are being mailed in a timely manner.
• For MMR-reporting purposes, LPC should measure the length of time from the date it receives a complete application to the date it mails a permit to the applicant when calculating the percentage of permits issued within LPC’s timeliness targets. If it is unable to perform this calculation, LPC should disclose in the MMR that the “issue date” represents the date a permit is printed for mailing, rather than the date it is actually mailed.
• LPC should implement controls to correct the data processing and data validation deficiencies (e.g., permits missing permit numbers, permits with future issue dates) discussed in this report. LPC should ensure that any new permit processing application has sufficient controls to mitigate such deficiencies.
• LPC should ensure that the notifications sent to applicants when applications are incomplete are issued within one week of assignment to a preservationist, as required.
• LPC should require that preservationists retain evidence of the Violations database searches conducted during the processing of CNE and XCNE applications.
• LPC should regularly reconcile the permits reflected in the revenue reports received from DOB with the permits LPC has issued and follow up with DOB to investigate any variances or discrepancies.

Agency Response

In its response, LPC agreed with 14 recommendations, partially agreed with one recommendation and disagreed with our recommendation that it consider collecting a portion of the permit fees from applicants to ensure that a fee is collected for all CNE permits issued.