Objective

To assess the extent of implementation of the seven recommendations included in our initial audit report, Physical and Financial Conditions at Selected Mitchell-Lama Developments Located Outside New York City (Report 2022-S-46).

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. Developments are owned and managed by private companies (owners). In exchange for low-interest mortgage loans and real property tax exemptions, the Program required owners to comply with limitations on profit, income limits for tenants, and supervision by Homes and Community Renewal’s (HCR) Division of Housing and Community Renewal (DHCR).

Often, owners employ managing agents, a person or entity responsible for managing the developments. Pursuant to the New York Codes, Rules and Regulations (Regulations), when they do so, they 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 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. 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 a development’s physical condition as well as fiscal reviews (site and office visits). They must provide the results, including recommendations, in a written report—the DHCR Management Field and Office Visit Report—to the development. DHCR requires the development’s Board of Directors or managing agent to respond to this report within 30 days, describing the plan for corrective action.

The objectives of the initial audit, issued on December 8, 2023, were to determine whether residents of Mitchell-Lama developments supervised by 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. This audit was based on a sample of five developments located outside New York City: Barker Terrace, Executive House, Seneca Towers, Sunnyside Manor, and Tompkins Terrace. According to DHCR officials, as of September 2023, Tompkins Terrace was dissolved, meaning it had voluntarily left the Mitchell-Lama program and was no longer subject to DHCR’s regulations.

Key Findings

DHCR officials made some progress in addressing the problems identified in the initial audit report; however, further improvements are needed. Of the initial report’s seven audit recommendations, one was implemented, four were partially implemented, and two were not implemented.

Key Recommendation

Officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in the follow-up report within 30 days of the report’s issuance.