Objective

To determine the extent of implementation of the seven recommendations in our initial audit report, Administration of Mitchell-Lama Waiting Lists (Report 2016-S-46).

About the Program

Our initial report, which was issued on August 17, 2017, sought to determine if Mitchell-Lama Housing Program units were assigned to eligible tenants in compliance with properly established waiting lists. The audit covered the period January 1, 2014 through February 21, 2017.

The Mitchell-Lama Housing Program (Program) was created in 1955 to provide affordable rental and cooperative (co-op) housing to middle-income families. A total of 269 State-supervised developments, with over 105,000 apartments, were built under the Program. In exchange for low-interest mortgage loans and real property tax exemptions, the Program required limitations on profit and supervision by the Division of Housing and Community Renewal (DHCR), an agency within Homes and Community Renewal. Twenty years after initial occupancy, housing companies are statutorily permitted to voluntarily dissolve (buy out) and leave the Program. When developments buy out, they are no longer subject to DHCR supervision, and apartments do not need to be kept affordable for middle-income families. There are currently 133 State-supervised Program developments with approximately 64,000 apartments.

Apartments are rented or sold to applicants on waiting lists maintained by DHCR’s Automated Waiting List (AWL) system. When there are vacancies, applicants should be offered and awarded apartments in the order their names appear on the waiting lists. Applicants must meet certain eligibility requirements such as income limits and family size, before taking occupancy of a unit. In addition, while internal transfer applicants (those already occupying Program units) have priority over external applicants for available apartments, developments are required to offer one out of every four available units to applicants on external lists.

During the initial audit, we found that DHCR needed to improve its monitoring of the developments to preserve the integrity of the Program and ensure that affordable units were awarded in compliance with New York Codes, Rules and Regulations, Title 9, Section 1727 (Regulations). Specifically, the audit found instances of non-compliance with key regulations, such as: applicants who were not selected from the AWL; developments not complying with the required 3:1 internal/external applicant ratio; successions not approved by DHCR; files missing required documentation to support tenant selection; and units vacant for extended periods of time. The audit also found that DHCR gave approval to admission and transfer applications that did not comply with the Regulations.

Key Finding

DHCR officials made some progress in addressing the problems we identified in the initial audit report. Of the initial audit report’s seven recommendations, one was implemented and six were partially 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.