Problems with the administration of the public housing modernization program run by New York State Homes and Community Renewal (HCR) have led to years-long delays in projects outside New York City, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“Our audit found substantial delays in the awarding of construction contracts, questionable contractor selections and contract changes that led to significant cost increases,” DiNapoli said. “People living in moderate- and low-income housing should not have to wait years for crucial projects to be completed. HCR needs to move quickly to address the problems we found and ensure that repair and maintenance projects paid for with public funds are started and completed as quickly as possible and without unnecessary expense.”

The Public Housing Modernization Program, administered by HCR’s Division of Housing and Community Renewal (DHCR) together with the state’s Housing Trust Fund Corporation (HTFC) provides grants to local public housing authorities for major repairs, such as fixing roofs, heating and ventilation systems and elevators. Much of this work involves projects to address health and safety issues. DHCR awards the program funds to housing authorities and provides program oversight, while HTFC disburses the funds.

DiNapoli’s auditors examined five projects to determine the amount of time it took to complete each project after its funding was approved. While work at two properties – in Middletown and North Hempstead – was completed within three and five years, other projects faced much longer delays.

Auditors found:

• $300,000 in funds was approved for a Kingston project in August 2002. The project included replacing stoops, handrails, sidewalks, kitchens and bathrooms as well as boiler upgrades. However, the first construction contract ($16,500 for electrical work) wasn’t awarded until February 2011. DHCR officials said they were unable to award construction contracts sooner because the amount of available funding was insufficient. However, the original funding provided more than enough to cover the first construction contract and by May 2005, $2.27 million in project funding was available.
• In Rome, $1 million was approved in November 2003, and by November 2005 approximately $4.67 million in funding was available for a project that included roofing, window replacements and hazardous materials abatement. However, it took more than six years for the earliest construction contract to be awarded after sufficient funds were available.
• In Greenburgh, $550,000 was approved in October 2000 for kitchen and bathroom renovations, new sewer lines and sanitary sewer replacements. An additional $1 million in funding became available in January 2002. However, the project’s initial three construction contracts were not awarded until July 2006. The project was completed in December 2009, more than nine years after funding was first made available.

DiNapoli’s auditors also reviewed the same five projects to determine whether their respective contractors were selected in compliance with governing regulations and procedures.

In Greenburgh, 11 bids were received for the consultant contract. The contract was awarded to the sixth-lowest bidder for $288,400, although DHCR rated the consultant with the lowest bid ($126,100) as comparable to the consultant who was selected. DHCR officials explained that, although they have oversight of the overall selection process, the final selection was made by Greenburgh officials. They also noted that factors not included in the rating, such as negotiations and interviews, impacted the final selection. However, officials provided no documentation to support this assertion. Thus, there was limited assurance that Greenburgh obtained the most reasonable price for the consultant services.

For the five projects, a total of 51 change orders – a formal modification of a contract – were approved by DHCR and the respective housing authorities. These change orders increased the overall cost of the five contracts from $69.8 million to $76.5 million.

For example, there were 16 change orders totaling $2.52 million for the Rome project. The largest of these for $1.1 million, was for the construction of a new “community building.” The construction of a new community building was included in one of this project’s funding contracts and was therefore appropriate, but the use of a change order to construct the new building was inappropriate.

DiNapoli’s auditors also reviewed 25 funding contracts relating to 16 projects to determine whether they were completed and had received final payment. In several instances officials had limited assurance that the final payments should have been made.

These contracts are approved by the local housing authorities and DHCR. The Comptroller’s office does not have a role in approving these contracts or change orders.

DiNapoli recommended HCR:

• Ensure that housing authorities award consultant and construction contracts on a timely basis, once funding contracts are executed, and establish time frames to award these contracts specific to the nature and scope of the work to be performed;
• Formally review the questionable bidding practices at the Greenburgh Housing Authority and determine whether appropriate procedures were used in the contractor selection process;
• Enhance and document DHCR oversight of the consultants and construction contractors chosen by housing authorities for restructured projects;
• Ensure that program funding recipients use change orders appropriately, cover only work within the project’s scope; and
• Ensure that projects are finished and inspected prior to authorizing final project payments.

DHCR officials disagreed with the audit’s findings. Their full response is included in the final audit.

Read the report Public Housing Modernization Program, or by go to: http://www.osc.state.ny.us/audits/allaudits/093016/15s5.pdf