The city’s Department of Housing Preservation and Development failed to properly supervise a major subsidized housing program, raising concerns about unqualified applicants being awarded apartments, according to an audit by the New York City comptroller’s office.
The audit, issued last week, examined the city’s oversight of the state’s middle-income Mitchell-Lama housing program. It reviewed the housing department’s supervision of four developments, two in the Bronx and two in Manhattan, from 2004 to 2006.
Auditors said documents at three developments provided “reasonable assurance” that tenants awarded apartments were appropriately selected. But auditors were unable to verify whether 12 approved applications at a Manhattan co-op development, St. Martin’s Tower, were properly awarded because of a lack of documentation. Also at St. Martin’s Tower, auditors found evidence that the occupant of one apartment had a residence in another state and the occupant of another also had an out-of-state address.
“Given the huge crisis in housing that we have in New York City, you want to make sure that those who are eligible have an opportunity to receive a Mitchell-Lama apartment,” said the city comptroller, William C. Thompson Jr. “It’s important that the city provide real oversight.”
The report also found that the city did not regularly review rent rolls and other materials submitted by owners, did not have a formal system to track complaints and did not perform its own audits frequently enough to ensure that owners were complying with Mitchell-Lama rules. The agency’s lack of a complaint tracking system was mentioned in two other audits, one by the comptroller’s office in 2000 and the other by the state comptroller’s office in 2005.
The Department of Housing Preservation and Development told the comptroller’s office that it would make changes in response to the report, including establishing a complaint tracking system and revamping some of its oversight documents. A spokesman said the agency was confident that the 12 apartments mentioned in the report were properly awarded, and that questions about residency of the two tenants had been resolved.
“Ensuring the fairness and integrity of New Yorkers’ access to affordable housing is important, and we take our Mitchell-Lama regulatory role extremely seriously,” the spokesman, Neill Coleman, said in a statement. He said the agency was “open to suggestions for improvement” and was pleased that auditors found no cases in which applicants were chosen from Mitchell-Lama waiting lists inappropriately.
The housing agency, disagreeing with some of the audit’s findings, maintained that internal auditors were reviewing rent rolls and other materials. The agency described a recommendation that it consider setting up a database for documents submitted by owners as “not feasible.”
Enacted in 1955 by the State Legislature, the Mitchell-Lama program offered owners tax exemptions and low-interest, government-financed mortgages, in return for building rental and co-op apartments affordable to middle-income families. As of last year, there were 81 Mitchell-Lama developments that the city housing agency was responsible for regulating; it shared oversight with the federal Department of Housing and Urban Development at 26 other developments. Each Mitchell-Lama development is privately owned.
The audit comes at a crucial time for the program. Housing advocates are concerned that the city’s supply of lower-cost units has rapidly decreased as landlords have left the Mitchell-Lama program to seek higher rents in the real estate market.
Last year, the state inspector general criticized the state’s Division of Housing and Community Renewal for mismanaging Mitchell-Lama buildings and allowing unqualified applicants to get subsidized units at the expense of legitimate tenants.