Purpose

To determine the extent of implementation of the recommendations in our initial audit report, Administration of the Article 8-A Loan Program (Report 2013-N-4).

Background

Our initial audit report, which was issued September 18, 2014, examined whether the loans awarded by HPD under the Article 8-A Loan Program (Program) were being used only for qualified projects and their intended purpose and whether loan recipients were complying with the requirements of their loans with respect to correcting violations and making other needed repairs. We found that HPD does not verify the accuracy of building owner affidavits submitted to support their Program eligibility and the reduced interest rates assigned to some of these owners are not supported. We determined that over time, these interest rate reductions will cost the Program several millions of dollars in revenue. We also found that many significant building violations and agreed-upon repairs go unaddressed by owners, contrary to contractual requirements. Finally, we found one building owner appeared to receive favorable treatment from HPD which could result in less Program monies available for other Program-eligible building owners.

Key Finding

HPD officials made some progress addressing the problems we identified in the initial audit report and additional actions are still needed. Of the initial report’s four audit recommendations, two were partially implemented and two were not implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audits/Reports of Interest

Department of Housing Preservation and Development: Administration of the Article 8-A Loan Program (2013-N-4)
NYC Department of Consumer Affairs: License Fee Revenues (2010-N-1)