Objective

To determine the extent to which Homes and Community Renewal (HCR) implemented the recommendations in our initial audit report, Low-Income Housing Trust Fund Program (Report 2013-S-32).

About the Program

Our initial report, issued on August 25, 2014, examined whether Low-Income Housing Trust Fund Program (Program) funds were being awarded and disbursed in an efficient manner to help meet the State’s critical low-income housing needs. The audit covered the period April 1, 2008 through December 11, 2013.

Established as a public benefit corporation in 1985 under Section 45-a of the Private Housing Finance Law, the Housing Trust Fund Corporation (Corporation) administers the Program. The Corporation’s mission is to further community development through the construction, development, revitalization, and preservation of low-income housing; the development and preservation of businesses; the creation of job opportunities; and the development of public infrastructure and facilities. The Program provides funding to eligible applicants to construct low-income housing; to rehabilitate vacant, distressed, or underutilized residential property; or to convert vacant or underutilized non-residential property to low-income housing. The Program received annual appropriations totaling $44.2 million for 2017 through 2019 and generally provides up to $125,000 per housing unit or a total of up to $2.4 million per project selected to receive funding.

Program funds are awarded through a Unified Funding Process, wherein applicants apply for housing resources through Unified Funding Multi-Family Program Requests for Proposals. According to an HCR report, for 2014 through 2018, Program awards totaled about $218 million for 91 housing projects, developing 4,775 housing units across the State.

During the initial audit, we found that a significant number of projects were being delayed by at least six months due to, among other issues, questionable award decisions, lax monitoring or enforcement of expectations, and delays in key approvals. The initial audit also found that the Program did not consistently adhere to its own policies regarding the project award process. Moreover, the Program did not adequately document management decisions to award funding to projects that scored lower than others based on criteria such as community impact/revitalization, financial leveraging, and project readiness. The lack of compliance with policies and transparency regarding awards challenges the integrity of the Program.

Key Finding

HCR officials made some progress in addressing the problems we identified in the initial audit report. Of the initial report’s three audit recommendations, one was implemented, one was partially implemented, and one was not implemented.

Key Recommendation

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