Objective

To determine whether the New York City Department of Social Services is administering the City Fighting Homelessness and Eviction Prevention Supplement (CityFHEPS) program according to the rules and regulations, thereby assisting Department of Homeless Services shelter residents in securing permanent housing. The audit covered the period from July 2019 through December 2023.

About the Program

New York City has long been plagued by a shortage of affordable housing and a homelessness crisis. In October 2018, the New York City Department of Social Services (DSS) launched its CityFHEPS rental assistance program intended to help New Yorkers living in homeless shelters and those who are at risk of homelessness secure permanent housing. DSS, which comprises the Department of Homeless Services (DHS) and the Human Resources Administration (HRA), leverages shared services, functions, and systems across its agencies to administer CityFHEPS, including DHS’ Client Assistance and Rehousing Enterprise System (CARES)—a case management system—and the Welfare Management System, the system of record for various social services programs in New York. For example, data shared between the two systems helps identify households who are potentially eligible for CityFHEPS. Households who are identified from the match are issued a letter, otherwise known as “Shopping Letters,” enabling them to initiate the search for housing. Once an apartment is identified and all requirements are met, HRA approves the household for CityFHEPS.

According to DSS officials, since the launch of CityFHEPS in 2018 through January 2024, the program processed 41,563 new cases helping 87,588 individuals to secure permanent housing. Officials also reported that, between fiscal years 2019 and 2023, CityFHEPS’s expenses increased from $174 million to $365 million. In fiscal year 2024, the program’s budget was $816 million.

CityFHEPS is administered in accordance with Title 68, Chapter 10 of the Rules of the City of New York (Rules). As outlined in the Rules, as of 2023, CityFHEPS consists of three programs: the tenant-based rental assistance program (Subchapter A), the project-based rental assistance program (Subchapter B), and the unit repair program (Subchapter C). Additionally, HRA offers “Unit Hold” incentives, typically 1 month’s rent, to landlords who agree to hold an eligible unit while a CityFHEPS application is being processed.

Key Findings

DSS has not established appropriate policies and procedures to guide the CityFHEPS process specifically and the program overall. This has resulted in systemic inefficiencies and irregularities in its administration of CityFHEPS. Further, DSS’ weak monitoring and oversight led to significant delays in families and individuals being able to obtain permanent housing. Among other issues, we found:

• For our judgmental sample of 52 cases, it took an average of 10 months from when households received a Shopping Letter to when they were approved for CityFHEPS and subsequently exited the shelter into permanent housing. In one case, a client had to wait more than 3 years after receiving the first Shopping Letter before being approved for the program.
• DSS does not take adequate steps to ensure the reliability of data entered in the CARES system, which plays a crucial role in ensuring that all potentially eligible households are identified and receive Shopping Letters, and that shelter exits are recorded and reported accurately.
• DSS does not have a process to verify that Unit Hold Incentives are paid only to eligible landlords. According to DSS records, a total of $1.7 million in Unit Hold Incentives were paid to landlords who were approved for Augmented CityFHEPS, despite their ineligibility.
• DSS has not provided adequate oversight of Subchapter B contractors, who are paid to manage apartments for CityFHEPS tenants, to ensure that units are managed efficiently and effectively and made available to eligible clients referred by DHS, that units meet safety and habitability standards, and that rental payments to contractors for units that become vacant are appropriate. For example:
  • For calendar year 2023, 116 of the 567 units (approximately 20%) designated for CityFHEPS tenants remained vacant as of December 2023. Although they were identified to us as being uninhabitable, DSS did not conduct in-person inspections to verify this status.
  • As of March 12, 2024, units in Subchapter B buildings had a total of 5,374 open violations, including 1,396 Class C (immediately hazardous) violations such as self-closing doors that were missing or defective, mouse/rat and roach infestations, visible mold areas greater than 30 square feet, and peeling lead paint. For instance, a Class C violation for peeling lead paint has been outstanding since October 2022. Moreover, DSS or a DSS-approved agency did not conduct physical inspections to confirm the safety and habitability of Subchapter B units.
  • DSS does not have adequate controls in place to ensure that payments are not improperly made for vacant CityFHEPS units. For instance, we found that DSS paid a contractor approximately $9,000 for two units that were vacant during 2023.

Key Recommendations

• Implement a system that appropriately monitors clients’ eligibility for CityFHEPS and ensure that Shopping Letters are issued and renewed in a timely manner.
• Routinely monitor client case management records in DHS’ CARES for potential errors and update/correct accordingly.
• Establish proper internal controls over CityFHEPS payments to landlords, including monitoring of incentives, and recoup any overpayments or improper payments, as warranted.
• Improve controls related to Subchapter B units, including but not limited to:
  • Establishing proper policies and procedures related to the administration of Subchapter B units.
  • Performing regular physical inspections of units to ensure their habitability for CityFHEPS clients.
  • Monitoring monthly rent payments to ensure that DSS is only paying for units that are occupied by CityFHEPS clients.