DiNapoli: Delays, Questionable Choices Impact State-Funded Affordable Housing Projects
New York State’s Low Income Housing Trust Fund program is meant to help alleviate New York’s affordable housing shortage, but it is beset by avoidable delays that keep thousands of applicants waiting months on end, according to an audit released yesterday by New York State Comptroller Thomas P. DiNapoli. This is the first of a series of audits looking at housing issues in New York state.
“We can’t afford to waste a single dollar or a single day when it comes to helping families find a place to live,” DiNapoli said. “It’s distressing to find that this important program is keeping families waiting for assistance because of unnecessary delays and the questionable awarding of funds to projects often deemed infeasible by the program’s own staff. This crucial program can and must be, run more efficiently and with greater transparency on why and how it chooses the projects it awards taxpayer dollars. I am pleased that, in response to our recommendations, the division said it’s taking steps to fix these problems.”
The Low Income Housing Trust Fund program is managed by the Division of Housing and Community Renewal (DHCR), whose parent agency is New York State Homes and Community Renewal. DiNapoli’s audit examined the program’s work over five years from April 1, 2008 to December 11, 2013. The program helps finance low income housing rehab and new construction with state, federal and private dollars. During the audit period, the program awarded $209 million to 111 projects, containing more than 5,850 housing units.
Auditors found about 4,400 low-income housing units were delayed by more than six months on average, in large part because of the division’s poor selection of projects to fund. The program awarded $10 million to six projects even though division staff ruled them “infeasible” after reviewing the applications. Projects considered “infeasible” are not supposed to be selected for funding. In some instances, the problems that caused delays were the same problems identified by staff based on their review of the project applications.
For example, auditors found a project to build 15 apartments in Ocean Hill-Brownsville, Brooklyn was rated “infeasible” by staff in 2011 due to financing problems. Nevertheless, in September 2011 it was awarded $670,000. When the financing fell through as anticipated, the project was delayed and construction had yet to begin as of early 2014.
Another Brooklyn project, to build 23 units for low income families and survivors of domestic violence in Bedford-Stuyvesant, was ruled “infeasible” because it lacked funding commitments and faced a budget gap of $2.3 million. It was nevertheless awarded $1.1 million, approved by the DHCR in August 2010. The project was delayed due to funding gaps. Construction did not start until June 2012.
Another Brooklyn project, for 24 apartments in Bushwick, was ruled “infeasible” and ranked lowest among all applications in a 2010 round of funding, but it was still awarded more than $2 million. At least 10 other projects with stronger applications were passed over. In fact, during the audit period, 61 “feasible” projects were passed over for funding despite scoring higher that the lowest-scored awarded project that did get funds.
A 72-apartment project in Fishkill was ruled “not recommended” because it lacked proper zoning approvals. The project was awarded close to $750,000 in 2011, but has been delayed by approximately three years because of its zoning problems.
DHCR staff concluded a Cortland plan to install energy efficient windows and wheel ramps as part of a rehab of 30 handicapped accessible units was feasible, but not recommended because of budget concerns. It was awarded $1.8 million in June 2009. Construction did not begin until begin until April 2012 and didn’t finish until April 2013 — four years after funds were awarded.
Auditors found that officials did not develop documentation to support their final award decisions, notably for those projects receiving funding despite scoring lower than other projects. By not following an established award process and by not maintaining documentation to support award decisions, auditors determined that officials created an environment which is neither transparent nor accountable.
As of 2012, more than half of New York renters and 30 percent of homeowners lived in housing considered unaffordable, which under federal guidelines is defined as housing that costs more than 30 percent of income.
The audit released yesterday is part of DiNapoli’s statewide initiative to determine whether the state’s low income housing stock is meeting New Yorkers’ needs.
DiNapoli’s audit recommended that Homes and Community Renewal:
- Follow existing policies and procedures for reviewing applications and awarding funds to low-income housing projects;
- Document the reasons behind management decisions to fund projects that don’t meet the established criteria
- Set up a formal monitoring system that produces internal management reports to ensure more timely production of low-income housing units.
The division responded that it believed it was following the policies and procedures for awarding funds to low income housing projects and that it has made changes to better document its decisions. The response is included in the audit.
A copy of the audit is available here: http://www.osc.state.ny.us/audits/allaudits/093014/13s32.pdf
Other DiNapoli reports on housing include:
- Division of Housing and Community Renewal: Housing Preference for Disabled Veterans
- Housing Affordability in New York State, a report that tracked the dramatic increase in New Yorkers whose housing costs are not affordable.