Comptroller Stringer Audit: Tens of Millions of Dollars in Fines from Bad Landlords Go Uncollected

New York, NY) — The Department of Housing Preservation and Development (HPD) – the agency that promotes the construction and preservation of affordable housing for low- and moderate-income New Yorkers – has failed to collect tens of millions of dollars in fines from landlords, a new audit released by New York City Scott M. Stringer shows. In Fiscal Years 2014 and 2015, nearly $35.1 million in judgments and settlements was to be collected from landlords across more than a thousand cases by HPD’s Judgment Enforcement Unit – the unit within the agency responsible for doing so. Yet, $34.2 million was still uncollected as of October 29, 2015, a collection rate of just 2.46 percent. The audit recommended HPD explore hiring additional attorneys and working with other City agencies to improve its collection rate. The agency agreed with the Comptroller’s recommendations.

Hundreds of New Yorkers living in affordable housing across the five boroughs face deplorable conditions like no heat or hot water, lead paint, and more. Yet, despite HPD’s issuing violations and taking landlords to housing court, enforcement cases did not actually result in fines being collected or landlords being sanctioned.

“We are not giving these families, our fellow New Yorkers, a fair shot. Even though we know these tenants – many who need us most – are often living in unfathomable conditions, we aren’t holding landlords accountable. It’s unfair and it’s unacceptable,” New York City Comptroller Scott M. Stringer said. “When we fail to protect affordable housing for our neighbors, we’re giving landlords a free pass to break the law. When bad landlords win, tenants lose. This system must be based on a higher standard of accountability. This is $34 million that could help address record homelessness, provide more affordable housing, support tenants, and help give working families a fair and fighting chance. Instead, it’s been left on the table, and tenants are suffering. It’s just not right.”

When HPD issues violations, it is authorized to impose civil penalties up to $1,000 per day until the hazardous condition is corrected and take landlords to Housing Court to force repairs. If a landlord fails to make repairs or pay a Housing Court judgment, the case is transferred to HPD’s Judgment Enforcement Unit for collection.

This investigation uncovered a massive backlog of cases at HPD’s Judgement Enforcement Unit. As of the end of March 2016, nearly half of the 2,100 open cases of violations were not assigned to an attorney – with some left open for nearly a decade. Over one fifth of open cases existed for three years or more.

The audit also found that when the agency did work on cases, HPD and its enforcement unit did not use every tool at their disposal to encourage property owners to pay fines and correct violations. Although the agency has the power to directly collect tenants’ rents and foreclose on properties to collect unpaid fines, HPD staff informed auditors these methods were rarely – if ever – used.

Specific findings include:

HPD Did Not Collect Fines for Hazardous Building Conditions

• HPD transferred 650 cases that were opened in FY14 to its Judgement Enforcement Unit. As of October 2015, however, just 3.36 percent of the $20.3 million owed had been collected.
• The agency referred 433 cases initiated in FY15 to the Judgement Enforcement Unit. But as of October 2015, only 1.22 percent of the $14.8 million owed had been collected.
• Overall, by October 2015, HPD and its enforcement unit had collected just 2.46 percent of the $35.2 million owed by landlords in FY14 and FY15.

Thousands of Backlogged Cases Languished for Years

• After a case is transferred to HPD’s Judgement Enforcement Unit for collection, it is assigned to the next available attorney. As of the end of March 2016, there were 2,100 open judgement enforcement cases – including 1,043 “backlogged” cases that had been transferred to the enforcement unit but not yet assigned.
• Of these 1,043 unassigned cases, nearly two-thirds had languished for at least a year – and the oldest case was nearly nine years old.
• On average, the other 1,057 cases – that had been assigned to attorneys – were left open but unassigned for two years.
• Each attorney’s caseload consisted of 250 cases, on average, potentially discouraging them from taking legal actions that require increased time and effort.

HPD agreed with all six of the audit’s recommendations, including that it:

• Work with other City agencies to identify payments to building owners – including, but not limited to rental assistance and tax abatements – which can be redirected to pay back HPD fines and judgments;
• Consider hiring additional attorneys or reassigning attorneys from other parts of the organization to work through the backlog of cases; and
• Transfer backlogged cases to either the City’s Law Department or an outside collection agency.

“Every New Yorker deserves safe housing with heat and hot water, and the City must be more proactive. I’m pleased HPD agrees with our recommendations, so together, we can send a clear message to bad landlords: break the law and there will be consequences,” Comptroller Stringer said.

To read the full audit, click here.

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