City Controller Christy Brady released an audit of the Department of Licenses & Inspections (L&I) on Thursday, finding “significant gaps” in oversight of city construction.

The audit reviewed residential and commercial construction sites, finding “systemic issues that pose risks to public and worker safety, as well as the potential loss of city revenue.”

Earlier this month, the Local discussed L&I with Cade Underwood, the policy director for City Councilmember Nicolas O’Rourke, in the wake of Underwood’s visit to a meeting of the Alden Park Tenants’ Association. Residents were concerned about longstanding safety issues at the East Falls apartment complex.

In the interview, Underwood said L&I’s approach to enforcement can be improved, and that many Philadelphia residents are “failed by the current approach.” Underwood said, “Our office believes that shifting how L&I renews rental licenses can be a key tactic to achieving swifter compliance from negligent landlords.”

In response to the audit, O’Rourke’s staff sent a statement to the Local, writing, “Controller Brady’s audit is incredibly timely as Councilmember O’Rourke works to strengthen tenant protections against unsafe and uninhabitable homes.”

The statement continued, “The councilmember is dedicated to helping Chair [Michael] Driscoll on Council’s Committee on Licenses and Inspections to support the public servants at L&I and the public they serve. L&I’s role in preserving public safety is too often overlooked until tragedy strikes, so it’s on elected representatives to be proactive and preventative, analyzing and addressing systemic issues.”

In response to the audit, L&I and the mayor’s office issued a press release, writing, “The Department of Licenses and Inspections — Inspections, Safety, and Compliance Division (L&I ISC) — acknowledges the findings and recommendations in the City Controller’s recently released performance audit. The Department appreciates the audit’s intent to strengthen service delivery and accountability and is actively working to address areas identified for improvement.”

The statement continued, “At the same time, it is important to recognize that the audit is one of several important influences that have helped shape the Department’s transformation under the Parker Administration, including the Joint Task Force Report and internal reviews.”

The audit

According to Allison Steele, a spokesperson for the Controller’s office, the audit builds on a previous report on L&I from June 2024.

The 2024 audit examined 120 imminently dangerous properties in Philadelphia and found that L&I’s Contractual Services Unit, which is tasked with overseeing the properties, was “not adequately staffed to keep up with the demand.”

At the time, L&I had “15 inspectors to oversee the imminently dangerous properties along with the thousands of additional properties identified as unsafe,” according to the audit.

One of the recommendations of the audit is for L&I to “create an active recruitment program to hire additional inspectors.”

The Local contacted L&I to ask if they have hired any inspectors since the audit, but did not receive a response.

The most recent audit focused on construction rather than on previously existing structures.

Auditors observed eight construction sites in the city, finding “L&I inspectors failed to request contractors’ licenses or documentation verifying workers’ employment status.”

In a press release, Brady said, “At no time during any of the site visits did the construction inspectors ask to review applicable contractor licenses or determine whether there were any misclassified workers on site. … By failing to actively review contractor licenses, L&I accepts that unlicensed contractors are performing work that may not comply with the Uniform Construction Code.”

The audit also found: incomplete inspection records, missing documentation, unqualified fire inspectors, and inadequate electrical inspection audits.

Of the 40 residential permits sampled in the audit, 13 lacked documentation showing that all required inspections were completed. Thirty-four of the permits sampled were “missing required comment details or photographs, violating L&I’s own inspection procedures,” according to the audit.

Auditors found that over 1,000 fire inspections by eight employees did not have the necessary Uniform Construction Code certifications.

“These findings are alarming,” Brady said. “They weaken L&I’s ability to ensure safe construction, and allow unlicensed contractors and misclassified workers to operate unchecked, putting both public and worker safety and the city at risk.”

In the press release, the controller noted that L&I Commissioner Basil Merenda and Mayor Cherelle Parker’s administration “have already begun implementing corrective actions in response to the audit’s findings.”

“We are encouraged by L&I’s commitment to addressing these issues,” Brady said. “Our office will continue to monitor progress and collaborate with the department to ensure that Philadelphia’s construction industry operates safely and responsibly.”

L&I’s press release concluded, “L&I ISC remains committed to continuous improvement and to collaborating with all oversight partners, stakeholders, and residents. As reforms continue, the Department’s focus will remain on compliance, transparency, and equitable service delivery across all construction activities in the City of Philadelphia.”

Tommy Tucker can be reached at Tommy@Chestnuthilllocal.com.