Audit Report On The Contract Of Homes For Homeless, Inc., With The Department Of Homeless Services To Operate The Saratoga Family Inn

This audit determined whether Homes for the Homeless, Inc. (HFH) is in compliance with key financial and programmatic provisions of its contract with the Department of Homeless Services (DHS) to provide temporary housing and related services to homeless families at the Saratoga Family Inn (Saratoga). DHS is responsible for providing emergency shelter and social services to homeless families in New York City. The services are designed to help homeless families gain self-sufficiency and move from temporary to permanent housing. HFH is a non-profit organization that seeks to provide services in a safe and secure environment to the residents of its five facilities in the City. These services include shelter, food, counseling, recreation, and child-care services. DHS contracted with HFH to provide 222 transitional housing units and related services to homeless families at the Saratoga facility in Queens.

DHS refers homeless families (clients) to Saratoga for services. Upon arriving at Saratoga, clients receive an in-depth assessment of their needs. The HFH staff then assists them in achieving independent living skills and finding permanent housing. According to Saratoga’s records, in Fiscal Year 2005, 159 of the 661 client families served at Saratoga during the year obtained permanent housing. For Fiscal Year 2004, HFH has received $7,223,915 from DHS under the Saratoga contract.

Audit Findings and Conclusions

HFH is generally in compliance with the basic programmatic provisions of its contract with DHS to provide shelter, food, and recreation services to its clients in a clean, safe, and secure environment at Saratoga. However, HFH violated other key contract provisions. The following conditions demonstrate HFH’s noncompliance with certain contract requirements:

• HFH did not comply with DHS contract provisions relating to payment procedures, leading to $1,055,339 in excessive charges at Saratoga for Fiscal Year 2004, as follows: HFH charged DHS $136,879 in legal fees and $1,605 in real estate taxes that were not directly related to the maintenance or management of Saratoga. In addition, $916,855 of HFH’s charges to DHS was not applicable to services provided under the contract, but instead related to the provision of services to clients housed in 33 non-contract rooms.

• HFH permitted a potential conflict of interest by hiring a law firm whose partner is a member of the HFH board.

• HFH did not consistently comply with the DHS contract provisions on social services, such as those relating to health-screening documentation, permanent-housing assistance, and employment services.

In addition, DHS did not adequately monitor HFH’s use of the non-contract rooms at Saratoga through a written agreement governing the use of those additional rooms.

Audit Recommendations

The audit recommended, among other things, that DHS:

• Recoup $1,055,339 in payments made to HFH for expenses that are unrelated to the Saratoga contract. These payments include: the $1,605 in real estate taxes, the $136,879 in legal fees, and the $916,855 overpayment amount for the non-contract rooms for Fiscal Year 2004.

• Review HFH financial records and determine whether there were similar overpayments to HFH for the preceding and subsequent years of the contract. DHS should recoup any such overpayments.

• Enhance its examination of reported expenses charged under the HFH contract to ensure that only those expenses that are incurred in providing services required by the contract are paid to the contractor.

• Ensure that HFH provides all necessary social services to Saratoga clients and properly documents the provision of those services in the case files.