Purpose

The objective of this audit was to assess the Division of Housing and Community Renewal’s oversight and monitoring of certain New York City Housing Authority projects funded through the Public Housing Modernization Program (Program). In addition, the audit determined whether Program-funded projects were completed as planned, and whether selected Program expenditures were justified and adequately supported. Our audit period was January 1, 2010 through February 25, 2015.

Background

New York State Homes and Community Renewal (HCR) is an umbrella entity consisting of all the State’s major housing and community renewal agencies, including the Division of Housing and Community Renewal (DHCR) and the Housing Trust Fund Corporation (HTFC). DHCR is responsible for the supervision, maintenance, and development of affordable low- and moderate-income housing in New York State. HTFC provides loans and grants to finance the construction, development, revitalization, and preservation of affordable housing. DHCR’s Public Housing Modernization Program provides grants to public housing authorities to be used for major repairs, such as replacing or repairing roofs; improving heating, plumbing, and ventilation systems; and renovating elevators. DHCR is responsible for overseeing the Program, while HTFC disburses the Program funds. Since inception in 1980, about $308 million in State funding has been awarded to 31 public housing authorities through the Program. Of that amount, $142.4 million was allocated for projects managed by the New York City Housing Authority (NYCHA).

In February 2010, DHCR and NYCHA entered into an agreement, called the “Omnibus Amendment to the Public Housing Modernization Contracts” (Omnibus Amendment). The Omnibus Amendment committed $42 million of NYCHA’s Program monies to NYCHA’s Marlboro Houses project (Marlboro) for roof replacement, masonry, brickwork, and facade and balcony repairs. Further, an additional $8.2 million was intended for certain non-Marlboro capital projects. At the time of the Omnibus Amendment, DHCR had approved Program funding for 77 NYCHA projects.

Key Findings

• DHCR’s monitoring of NYCHA’s Program-funded projects was weak. At the outset of our audit, DHCR officials did not have accurate and up-to-date management information regarding the status of NYCHA’s projects. The information officials provided was dated February 2010. Specifically, five projects (totaling about $4.6 million) were not yet finished, although DHCR officials indicated that they were complete. In addition, eight of the ten projects officials listed as incomplete were, in fact, finished.
• DHCR officials paid $6.8 million for a change order for Marlboro that was not adequately supported. Neither DHCR nor NYCHA officials could provide details of the change order charges. Further, the change order brought the total funding allocation for the project ($45.2 million) to $3.2 million more than its original approved amount. As a result, funds designated for other projects had to be re-allocated to this project. NYCHA approved another change order (for $977,500) for work not within the scope of the original contract, which should have been competitively procured.
• DHCR did not have formal time frames for awarding a contract once funding was approved. For most of the projects we reviewed, NYCHA took between 1 year and 9 months to 4 years and 7 months (and in one case 9 years and 9 months) just to award the contracts. This likely precluded project completion in the timeliest manner.

Key Recommendations

• Improve project monitoring of State-funded NYCHA housing programs. In particular, ensure that project status information is up-to-date and accurate.
• Work with NYCHA officials to develop action plans to help ensure unfinished projects are completed on time.
• Instruct NYCHA to require contractors to sufficiently detail and justify the basis for all change orders, including the related costs.
• Establish time frames for NYCHA and other funding recipients to award project contracts.

Other Related Audits/Reports of Interest

New York City Department of Housing Preservation and Development: Administration of the Article 8-A Loan Program (2013-N-4)
Division of Housing and Community Renewal: Housing Preference for Disabled Veterans (2010-S-42)