Division of Housing and Community Renewal – Physical and Financial Conditions at Selected Mitchell-Lama Developments Located Outside New York City

Issued Date
December 08, 2023
Homes and Community Renewal - Division of Housing and Community Renewal


To determine whether residents of 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 December 2022.

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 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. Mitchell-Lama housing is owned by private companies with independent authority to 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.

Often, owners employ a managing agent, a person or entity responsible for managing the developments. Pursuant to New York Codes, Rules and Regulations (Regulations), when they do so, owners are required to enter into an annual agreement with the managing agent, which must include a DHCR-approved Management Plan. It is the responsibility of the owners to provide safe and habitable housing and to maintain the financial and physical 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. Both the owner and managing agent must agree to manage the development in accordance with local codes and State rules and regulations. Each development has an assigned DHCR Housing Management Representative (management representative), who is responsible for monitoring and evaluating the development’s management, as outlined in Title 9 of the Regulations. Management representatives are required to conduct yearly on-site assessments of the development’s physical condition as well as fiscal reviews (site and office visits) and to provide the results – including recommendations – in a written report, the DHCR Management Field and Office Visit Report (Field and Office Visit Report), to the development. DHCR requires the development’s Board of Directors (Board) or managing agent to respond to the Field and Office Visit Report within 30 days, describing the plan for corrective action.

This audit is based on a sample of five developments located in counties outside of New York City: Barker Terrace (Westchester), Executive House (Albany), Seneca Towers (Monroe), Sunnyside Manor (Westchester), and Tompkins Terrace (Dutchess).

Key Findings

DHCR does not adequately oversee the financial and physical conditions at the sampled developments. Management at all five sampled developments misspent funds, and management at two of the sampled developments failed to provide a safe and clean living environment for their residents.

  • We took issue with 164 transactions, totaling $327,363, as follows:
    • 84 transactions, totaling $105,344, for items unrelated to normal operations, including $69,285 in bonus payments and $36,059 for other unrelated expenses such as parties, meals, trips, and gifts.
    • 61 transactions, totaling $156,289, that were inadequately supported. We therefore could not determine if these expenses were appropriate and related to operations. For example, at one development, management did not provide adequate support for an employee reimbursement totaling $7,594 for plumbing supplies.
    • 19 apparent conflict-of-interest transactions, totaling $65,730. At one development, management contracted with a construction company owned by its superintendent for services totaling $14,159, while the superintendent was authorized to make decisions about purchasing and obtain estimates for work contracted to outside vendors. At another development, management made 15 payments, totaling $51,571, to its managing agent and had no evidence that competitive analysis or bidding was conducted prior to awarding projects to its own company.
  • We observed hazardous conditions, including water-damaged ceilings and rusty, loose railings, at two of the developments. DHCR officials identified hazardous conditions during their own visits but often did not share their findings with developments in a timely manner. Therefore, many of the unsafe conditions DHCR observed remained uncorrected, sometimes for years.

Key Recommendations

  • Improve monitoring of financial conditions at the sampled developments, including but not limited to:
    • Reviewing expenditures, including all bonus payments and petty cash and reimbursements transactions, and enforcing compliance with Regulations related to the accounting for and proper use of the developments’ funds;
    • Taking appropriate action, including recouping funds, for transactions that are inappropriate or unusual; and
    • Enforcing compliance with Regulations related to conflict-of-interest transactions and to the responsibilities of the Board, and systematically reviewing Board meeting minutes to identify non-compliance with Regulations and acting when necessary.
  • Improve oversight of physical conditions at sampled developments by ensuring immediate corrective action is taken when unsafe conditions are identified, and document dates of correction.

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