State Comptroller Finds Unsafe Conditions at Mitchell-Lama Cooperatives

Thomas DiNapoliNew York State Comptroller, released a tutorial on how to No create an affordable co-op.

In a recently released audit, DiNapoli found appalling conditions in three Mitchell-Lama Cooperatives — York Hill in Manhattan, Arverne/Nordeck in Queens and Arlington Terrace/North Shore in Staten Island — conditions that included broken fire doors, mold, collapsed ceilings, pest infestations and unsafe facades. To top it all off, auditors found more $1 million in questionable expenses in three cooperatives.

“The conditions identified during this audit are unacceptable,” DiNapoli said in a statement. “The city needs to have much better oversight of the Mitchell-Lama program and ensure that funding for these buildings is directed toward their maintenance.”

The Mitchell-Lama program provides affordable rental and cooperative housing to moderate-income families throughout the state. Department Housing Preservation and Development oversees 93 Mitchell-Lama apartment complexes in the city, comprising approximately 47,000 apartments. City Housing Development Corporation (HDC) conducts physical inspections of developments, and HPD relies on HDC reports to determine whether developments are being properly maintained.

However, HPD did not provide auditors with any required documents. annual apartment inspection reports which must be carried out by building management agents. The audit found that HPD failed to adequately supervise and screen managing agents at the facilities. HPD said HDC never provided them with inspection reports, but auditors found past HDC reports that noted unsafe conditions that were never corrected by HPD.

Under city law, the managing agents of Mitchell-Lama Developments are responsible for maintaining all books, records and accounts relating to the housing development and for the wise use of funds for the business associated with the development. HPD was unable to adequately estimate the costs of these developments.

Auditors examined a sample of transactions made at three sites. They found that managing agents spent approx. $1.6 million which were either not related to normal activities or were not adequately supported by financial documentation. Besides, US$620,000 the contracts did not contain written approval from HPD and/or there was no evidence of competitive analysis or bidding.

Although many of these developments were carried out with a loss of funding, auditors found that productivity bonuses or tips awarded to property management employees even in situations where hazardous or unsafe conditions were not corrected.

The audit recommends that HPD do the following: ensure that managing agents are conducting annual audits of individual units, that appropriate reports are being compiled and that problems are being corrected; develop and implement policies and procedures regarding the payment of bonuses and remuneration; and periodically review contracts and expenses to identify payments to vendors and service providers. If the contract exceeds US$100,000 in any fiscal year, ensure it is competitively submitted and approved by HPD.

“I am very pleased that State Comptroller DiNapoli has taken a close look at HPD and several Mitchell-Lama projects, including York Hill in my district,” the state said. Senator Liz Krueger said. “The Mitchell-Lama program provides affordable housing, but my office has heard many concerns from York Hill residents about ongoing problems there, which the State Comptroller’s audit confirmed. HPD needs to address these issues quickly and effectively.”