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

Issued Date
June 15, 2023
Homes and Community Renewal


To determine whether tenants living in Mitchell-Lama developments supervised by Homes and Community Renewal’s (HCR) Division of Housing and Community Renewal (DHCR) are provided safe and clean living conditions, and whether funds are properly accounted for and used for intended purposes. Our audit covered the period from January 2019 through January 2023.

About the Program

The Mitchell-Lama Housing program (Program) was created in 1955 by the Limited Profit Housing Act, to provide affordable rental and cooperative (co-op) housing to middle-income families. A total of 269 State-supervised Mitchell-Lama developments (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, income limits for tenants, and supervision by DHCR. Developments are owned by private companies and can exit the Program under certain conditions. DHCR works with owners as they near the end of their 20 year affordability requirements to provide low-cost financing tools that help maintain developments while also extending their affordability. As part of the State’s commitment to increase and preserve the number of affordable housing opportunities for its residents, HCR makes capital available for the preservation and improvement of these properties.

Development owners often enter into agreements with agents to manage the developments (managing agents). It is the responsibility of the owner to provide safe and habitable housing and to maintain the physical and financial integrity of the development, and it is the function of the managing agent to effectively and efficiently manage the development to ensure that the owner’s responsibilities are carried out. Owners and managing agents must agree to manage the development in accordance with local codes and State rules and regulations. A DHCR Housing Management Representative (Management Representative) is assigned to each development and is responsible for supervising and evaluating the management of their assigned projects, and for recommending corrections in a written report, DHCR Management Field and Office Visit Report (Field and Office Visit Report), of any deficiencies or improvements where warranted. Title 9 of the New York Codes, Rules and Regulations (Regulations) outlines specific requirements for Management Representatives when conducting reviews of developments. This audit is based on a sample of four developments located in New York City: 753 Classon Avenue Housing Company (Brooklyn), Cathedral Parkway Towers (Manhattan), Findlay House (Bronx), and Jamie Towers (Bronx).

Key Findings

DHCR does not adequately oversee the physical and financial conditions at the sampled developments. This likely caused management at those developments to misspend funds and fail to provide a safe and clean living environment for their residents.

  • We observed hazardous conditions at the four developments, including damaged ceilings and mold-covered playground mats at a preschool located in one of the developments. DHCR officials also identified hazardous conditions during their own visits but often did not share their findings with the developments in a timely manner. Many of the unsafe conditions DHCR observed remained uncorrected, sometimes for years.
  •  All four developments misspent funds under DHCR’s watch. For a sample of 280 transactions totaling approximately $1.9 million from the general ledgers of the four developments, we identified 139 transactions totaling approximately $1.5 million that were either unrelated to normal operations or inadequately supported or for which there were no approvals, competitive analysis, and/or bidding, as required. This included $155,967 in bonuses and $21,530 spent for parties.
  • DHCR reported inaccurate information to the Legislature, State Comptroller, and Attorney General in the required Annual Report on Mitchell-Lama Housing Companies in New York State.

Key Recommendations

  • Improve monitoring of developments, including but not limited to:
    • Verifying that Management Representatives responsible for oversight at the sampled developments review all items on the Field and Office Visit Report and prepare and send those reports to the developments’ management promptly, as required;
    • Conducting at least one annual site visit to each development;
    • Ensuring immediate corrective action is taken when unsafe conditions are identified, and documenting dates of correction; and
    • Taking action against managing agents who are non-compliant with Regulations.
  • Review expenditures, including all bonus payments, petty cash transactions, and reimbursements, at the sampled developments, and take appropriate action, including recouping funds, for transactions that are inappropriate or unusual. 
  • Improve monitoring of financial conditions at the developments by enforcing compliance with Regulations related to the proper use of the developments’ funds, competitive analysis and bidding, and DHCR’s approval requirements for annual expenditures of $100,000 or more.
  • Ensure Program staff maintain a current and accurate list of the DHCR-supervised developments and communicate reliable data to the Legislature, State Comptroller, and Attorney General.


Kenrick Sifontes

State Government Accountability Contact Information:
Audit Director:Kenrick Sifontes
Phone: (212) 417-5200; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236