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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015


DiNapoli Audit Finds Hazardous Conditions Persist in Mitchell-Lama Developments

June 15, 2023

New York State’s affordable housing agency, Homes and Community Renewal (HCR), is falling short in its oversight of several Mitchell-Lama developments, according to an audit released today by State Comptroller Thomas P. DiNapoli. Auditors found unsafe conditions at facilities that went unaddressed, sometimes for years, and questionable spending.

“Our auditors found that tenants are subjected to unsanitary, unacceptable conditions and that water leaks, collapsing ceilings, mold and other problems were left unaddressed sometimes for years,” said DiNapoli. “Homes and Community Renewal needs to improve its oversight of conditions at Mitchell-Lama buildings and monitor spending more closely. Tenants deserve nothing less.”

Auditors examined conditions and records at four Mitchell-Lama developments in New York City – 753 Classon Ave. Housing Co. (Classon), located in Brooklyn, Cathedral Parkway Towers (Cathedral), located in Manhattan, Findlay House (Findlay), located in the Bronx, and Jamie Towers, also located in the Bronx – between 2019 and January 2023. They found poor conditions and disrepair at all of the developments. Auditors also found $1.5 million in total spending at the developments that was either unrelated to normal operations, lacked adequate support or for which there were no approvals, competitive analysis and bidding, as required.

The Mitchell-Lama Housing program provides affordable rental and cooperative housing to middle-income families. The program is supervised by HCR’s Division of Housing and Community Renewal (DHCR). Mitchell-Lama developments are owned by private companies which often enter into agreements with agents who manage their buildings. Owners are responsible for providing safe and habitable housing and maintaining the development’s physical and financial integrity, while managing agents manage the developments to ensure the owners’ responsibilities are met. Each Mitchell-Lama development is assigned a DHCR Housing Management Representative who is responsible for monitoring and evaluating the development’s management and providing recommendations for corrections.

Auditors made multiple visits to the four developments and compared their findings with Field and Office Visit Reports that management representatives are required to maintain.

Poor Physical Conditions: Highlights (Photos in Audit)

  • Classon: Partially collapsed ceilings in the community room, an entrance out of compliance with the Americans with Disabilities Act standards and evidence of mold in the basement and community room.
  • Jamie Towers: Stairwell doors and garbage chutes would not close on their own, posing a fire risk to tenants, cracked walkways and an out-of-service elevator.
  • Findlay Houses: Self-closing door at the building’s main entrance failing to close properly, posing a safety risk to tenants.
  • Cathedral: Missing concrete, calcium drips, a trip hazard, pools of water, cracks in the sidewalks, bricks jutting out around flower beds and retaining walls, an unsafe retaining wall and mold and fungus on the playground mat of the preschool.

To improve physical conditions at the developments, auditors made several recommendations to increase DHCR’s monitoring, including conducting at least one annual site visit to each development, taking action against managing agents who are not compliant with regulations, ensuring immediate corrective action is taken to address unsafe conditions and developing a process to use publicly available violations and complaints data in the monitoring of developments.

Misspent Funds

In addition to poor oversight of physical conditions, auditors determined that DHCR officials’ oversight of financial conditions at these developments was weak. In a review of 280 transactions, totaling $1.9 million, auditors found that nearly half, 139, worth about $1.5 million, were either unrelated to normal operations, inadequately supported, or lacked documented proof of approval, competitive analysis, or bidding, as required.

Auditors looked at expenses at the four developments and found in three – Cathedral, Jamie Towers, and Classon – instances where funds were not properly accounted for or were used for unusual purposes. Auditors determined that DHCR officials are also not ensuring that building management is being held accountable for maintaining healthy, safe standards of living for tenants and apartment owners.

Despite the negative financial findings, management at all four developments have recently applied for a maintenance or rent increase.

The audit included several recommendations to improve the monitoring and oversight of financial conditions, including that DHCR officials review the inappropriate or unusual expenditures identified by the auditors, implement policies and procedures for certain payments and procurements as well as internal controls, and mandate regular training for management.

DHCR disputed several of the audit findings and noted that the COVID-19 pandemic created many challenges, including limiting its ability to perform inspections. Officials did agree to consider many of the recommendations made. The agency’s response is included in the audit.

This is the first in a series of audits on the physical and financial conditions at Mitchell-Lama Developments statewide.

Division of Housing and Community Renewal: Physical and Financial Conditions at Selected Mitchell-Lama Developments in New York City