Objective

To determine whether the New York City Department of Homeless Services (DHS) has appropriate oversight and adequate controls over the capital improvement process at City-owned homeless shelters. Our audit covered the period from July 1, 2013 through December 16, 2019.

About the Program

DHS, an administrative unit of the New York City Department of Social Services, is the primary agency responsible for providing transitional housing and services for eligible homeless families and individuals in New York City (City) and for providing fiscal oversight of the homeless shelters. Governed by a "right to shelter" mandate, the City provides temporary emergency shelter to every eligible person who requests services. Over the years, a number of City homeless shelters have fallen into disrepair. The City has addressed the need with a significant increase in capital investment for City-owned shelters to correct conditions that have built up over many years. Capital investment includes new construction, renovations, and purchases of furnishings or equipment. DHS officials advised us that each project is prioritized based on safety, stability of the infrastructure, and cosmetic nature of renovations. Once a capital project is added to the DHS capital plan, it first goes through a design phase and then a construction phase. As of April 2019, there were 415 homeless shelters in the City, including 53 owned by the City, subject to DHS oversight. For City fiscal years 2014 to 2018, DHS had a total of 21 capital improvement contracts (17 construction and 4 design) with 69 projects (one contract can include multiple projects) totaling approximately $39 million. Of the 53 City-owned shelters, 30 had capital improvement projects. All City agencies must follow the New York City Procurement Policy Board Rules (PPB Rules) for the procurement of all goods, services, and construction.

Key Findings

DHS lacks the necessary controls over City-owned homeless shelter capital improvement projects to ensure urgently needed projects are properly prioritized and completed timely and within budget. Across the areas examined, we found two key components of sound oversight and monitoring were either deficient or lacking altogether: DHS did not establish formal policies and procedures tailored specifically to its capital planning process to ensure consistent decision making across all projects, nor did it have strong project monitoring controls to minimize delays and cost overruns.

Of the nine projects in our sample:

• Four projects remained on DHS’ capital plan for lengthy periods – sometimes years – before being initiated.
• Once initiated, five projects were not completed on time, ranging from 6 months to 4½ years late.
• Six projects exceeded their original budgeted cost by a total of approximately $9.7 million. Notably, one project – the East 119 Street project, which was originally expected to cost $511,000 – exceeded its budget by $2.7 million.
• Delays in initiating and completing capital improvements may have caused poor conditions to deteriorate even further, possibly resulting in increasing costs. Furthermore, for some projects in our sample, such deteriorating conditions forced homeless adults and families to relocate to other shelters or to other rooms within the shelter:
  • At Brooklyn’s Auburn Family Residence, which housed 172 adult family units, the bathroom upgrade project to address antiquated communal bathroom conditions had significant delays. This project, with an original completion date of December 2018, is now expected to be finished in December 2022.
  • At Park Slope, a 100-bed women’s shelter also in Brooklyn, the roof replacement project was added to the capital plan in March 2015, but construction did not begin until June 2018 – more than three years later.

Key Recommendations

• Establish written policies and procedures for managing all aspects of the capital improvement process, including capital project planning, monthly reporting requirements, and compliance with PPB Rules and DHS’ internal practices regarding competitive bidding and maintenance of procurement documentation.
• Standardize the monthly reporting format and develop a process to ensure that monthly reports are dated, reviewed, and approved.
• Develop and implement a system for tracking the progress and costs of capital projects.