Objective

To determine whether the New York City (NYC) Department of Housing Preservation and Development (HPD) is ensuring that vacant apartments at Mitchell-Lama developments are filled timely. Our audit covered apartments that were vacant, and those that became vacant, in calendar year 2019 and actions taken by HPD through March 12, 2021.

About the Program

The Mitchell-Lama Housing Program was created in 1955 to provide affordable rental and cooperative (co-op) housing to middle-income families. HPD, the nation’s largest municipal housing preservation and development agency, is charged with promoting the quality and affordability of NYC’s housing. In NYC, there are 93 HPD-supervised Mitchell-Lama rental and limited-equity co-op developments with approximately 47,000 total apartments.

Apartments in Mitchell-Lama developments tend to be desirable because of their affordability; consequently, the waiting lists for many of these apartments can be quite lengthy. To ensure efficient turnover of vacant apartments, HPD’s Reporting and Compliance Directive (Directive), issued in June 2017, requires developments to fill vacancies within 120 days. Developments are also required to submit quarterly Apartment Turnover and Vacancy Reports (vacancy reports) to HPD, showing apartments that were filled during the quarter (turnovers) and current vacancies that need to be sold or rented. For apartments that have been vacant for periods exceeding 120 days, developments must provide a written explanation for the delay as well as a plan of action to resolve the matter causing the prolonged vacancy. HPD’s staff of Property Managers are responsible for monitoring the developments’ apartment turnovers and vacancies to ensure compliance with requirements.

Key Findings

HPD does not adequately monitor developments to ensure their compliance with the requirements of its 2017 Directive.

• Despite the scarcity of affordable housing, vacant apartments were generally not filled within the 120-day time frame, with 1,286 apartments taking, on average, 222 days to fill, including 214 that remained vacant for a year or longer.
• As of December 31, 2019, 78 developments reported 670 vacancies, 371 (55 percent) of which had been vacant for over 120 days, including 111 apartments vacant for over a year and eight apartments vacant for more than 3 years.
• We estimate that protracted delays in filling apartments cost the developments about $9.1 million in unrealized income as of December 2019.
• Of a sample of 49 vacancies from the December 31, 2019 quarterly reports, 20 were still vacant as of February 9, 2021, including 4 three-bedroom apartments in the Bronx, each with a monthly rent of less than $2,000.
• At one development – Lindsay Park in Brooklyn – 15 apartments had been vacant for as long as 30 years.
• HPD does not enforce the requirement for developments to submit plans of action for apartments vacant for over 120 days, nor does it have evidence that it follows up with developments for status updates.
• Developments’ quarterly vacancy reports are not submitted to HPD in an analysis-friendly format, which compromises their value as a monitoring tool.

Key Recommendations

• Obtain and analyze the vacancy reports to identify developments that consistently have delays in filling their vacant apartments, and work with these developments to identify issues and improve performance.
• Improve monitoring of developments with vacancies greater than 120 days and ensure they provide a plan of action to fill the apartments, and follow up with developments to ensure compliance with the plan.