Objective

To determine the extent of implementation of the recommendations in our initial audit report, Enforcement of the Mitchell-Lama Surcharge Provisions (Report 2017-S-12).

About the Program

Our initial report, which was issued on April 10, 2018, examined whether the Division of Housing and Community Renewal (DHCR) properly assessed surcharges at Mitchell-Lama housing developments.

While surcharges were generally properly calculated and assessed for the tested transactions at the sampled developments, there were significant deficiencies in the processes used. We found that only 30 percent of the required income verification audits for our sample had been done. We also found that developments were not charging tenants the maximum allowable surcharges when tenants did not provide a certified tax return to substantiate self-reported income. Additionally, DHCR is several years behind in generating the match between tenants’ self-reported information and their tax records. At the time of our review in 2017, DHCR’s most recent match was for 2012. Further, the Private Housing Finance Law states that tenants whose income exceeds the maximum income limit by 25 percent or more require DHCR’s approval to remain in their units. Our initial audit identified 29 units at our sampled developments that exceeded the limit. However, we found no evidence that DHCR had approved the residency of these tenants.

Key Finding

We found that DHCR has made some progress in addressing the issues identified in our initial report. Of the six recommendations, three were partially implemented and three 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.