Audit Report On The New York City Housing Authority’s Preventive Maintenance And Repairs On The Roofs Under Warranty

Executive Summary

The New York City Housing Authority (NYCHA or the Authority) is the largest public housing authority in the United States, operating 325 housing developments, consisting of 2,418 buildings with approximately 176,000 apartments throughout the five boroughs.  Three hundred four of its 325 developments are 30 years or older.  NYCHA public housing is home to nearly 400,000 low- and moderate-income residents.

Roofs that are adequately maintained, repaired, and, when necessary, replaced are essential to preserving building integrity by helping to prevent water intrusion into buildings that degrades ceilings, walls, and floors.  Water intrusion can also cause mold, a condition that poses potentially significant health risks to residents.  According to NYCHA, during Fiscal Years (FYs) 2000 through 2010, NYCHA spent approximately $452 million for 715 roof replacements and related work—an average of more than $632,000 for each roof.  Thereafter, from FY 2010 through FY 2014, NYCHA allocated $309 million for roofs in its Capital Plan.  Additionally, in 2015, the City and New York State in combination pledged $300 million over three years for 223 roof replacements.  In addition, in 2018, the City allocated $1.3 billion in capital funds over 10 years to replace 952 roofs at NYCHA buildings across the City, according to a City Council report.

When putting new roofs on NYCHA buildings, the Authority generally contracts with roofing contractors to install 4-ply roofing systems with manufacturers’ 20-year warranties.  NYCHA must implement a maintenance program entailing regular, documented inspection and upkeep of the roofs in order to be covered by these warranties.  Each roof warranty specifically stipulates that failure by NYCHA to follow the warranty maintenance program will void the warranty.  The consequence, if the warranty is voided, is that any subsequent roof repairs—and their cost—would become NYCHA’s responsibility.

NYCHA’s Capital Projects Division (CPD) is responsible for the replacement and installation of the Authority’s roofs, ensuring the adequacy of the contractors’ completed work, and securing the essential documents from the contractors—including the roofing systems’ maintenance manuals, the contractors’ guarantees, and the manufacturers’ warranties.  CPD is also responsible for maintaining the warranty documents and the dates of warranty coverage in NYCHA’s IT systems and transferring the hard-copy warranty documents to the relevant Development Superintendents, the NYCHA officials at each development responsible for inspecting and maintaining the new roofs at his or her assigned development.

From that point forward, each Development Superintendent is responsible for administering the roof warranty, which includes conducting and documenting monthly inspections, initiating work orders for any necessary roof repairs, and maintaining the associated records.

The Development Superintendent reports to a Property Manager, who oversees the development’s maintenance and operational activities.  In addition, NYCHA has 20 Regional Asset Managers (RAMs) that oversee several developments and, as relevant to this audit, are supposed to inspect the roofs semiannually, among their other responsibilities.  The Development Superintendents, Property Managers, and RAMs report through borough and program directors to NYCHA’s Senior Vice President (SVP) for Operations, who reports to the General Manager & Chief Operating Officer, who in turn reports to NYCHA’s Chair & Chief Executive Officer.  NYCHA’s Support Services department is responsible for dispatching skilled trades staff, as needed, for various types of work, including assisting the Development Superintendents with assessments of roof problems and the performance of minor roof repairs.

During our recent audit, Audit Report on the New York City Housing Authority’s Oversight of Contracts Involving Building Envelope Rehabilitation (#SE16-065A), issued June 30, 2017, we observed conditions of ponding and staining, both indications of poor drainage, and other maintenance-related issues on several newly installed roofs that could jeopardize the integrity of the roof systems and the warranty coverage at the affected NYCHA buildings.

We conducted this audit to determine whether NYCHA is adequately performing the preventive maintenance and repairs required under the roof warranties.

The scope of this audit covers roofs that were replaced at various NYCHA buildings throughout the five boroughs during FYs 2000 through 2010, with warranties that should have been in effect during the period of the audit.  Accordingly, we focused particularly on roofs with extended warranties—those with a coverage period of at least 20 years—at 158 buildings, which were replaced at a total cost, with related work, of nearly $275 million.

Audit Findings and Conclusions

Our audit found that NYCHA’s performance of the preventive maintenance and repairs required under its roof warranties is inadequate.  Although NYCHA stated that it inspected the roofs on a monthly basis, the reports we were provided did not reflect that inspections were in fact done each month.  Further, based on our review of the reports we were provided, we found that NYCHA’s inspections were performed primarily by janitorial staff, and that they failed to identify deficient conditions on the roofs and thus failed to trigger appropriate action to address them.  Overall, we found that NYCHA’s approach was largely on corrective maintenance and not on preventive maintenance.

Our inspections of 35 sampled roofs in 13 NYCHA developments found significant to moderate deficiencies on 19 (54 percent) of the roofs, indicating that the maintenance and repairs required by the warranty were not always performed or were not performed properly.  The deficiencies included ponding water, soft and spongy spots, blisters, sagging roof conditions, open seams at the edges of base flashing on rooftop structures, and damaged masonry.  Generally, these kinds of conditions are associated with drainage problems and other issues that leave a roof susceptible to water penetration and an accumulation of moisture under the roof membrane—an ideal condition for mold to grow.

We also found that NYCHA is performing unauthorized roof repairs that do not comply with the roof manufacturers’ warranty requirements, potentially jeopardizing the warranty coverage and increasing costs for NYCHA.  This operational failure may well result from our finding that the majority (69 percent) of the 13 Development Superintendents we interviewed—the individuals that NYCHA principally relies on to meet its obligations under the roof warranties and to maintain continued warranty coverage—were not aware of the warranty coverage that applied to their assigned roofs.  Finally, we found that NYCHA’s roof-related record-keeping—both in hard copy and on its IT systems, which is necessary for the effective tracking of roof maintenance and repairs, and for preservation of NYCHA’s roof-warranty coverage, was inadequate.

Based on these audit findings, we determined that at least $24.6 million in roof-investment at the 19 sampled NYCHA buildings is at risk, as is, potentially, the health and welfare of the tenants who reside in those buildings.  In addition, at least 8 roofs were replaced at NYCHA’s expense 10 years earlier than their expected useful life and before the expiration of the manufacturer’s warranty, with no discernible effort by NYCHA to invoke the warranty coverage and no documented explanation for the absence of such an effort.  We estimate that the economic impact of the premature replacement of those 8 roofs was a loss of $367,000 and the unplanned expenditure of $3.7 million to replace them.

Overall, organizational weaknesses and a lack of transparency in NYCHA’s operations appear to have significantly impeded its performance of its responsibilities to inspect, preventively maintain, and repair its roofs.  NYCHA’s roof-related business processes are in urgent need of attention, specifically, in two areas: (1) to establish a clear, current organizational structure with defined roles and responsibilities of designated staff at each level of the organization; and (2) to leverage the capabilities of NYCHA’s IT systems by ensuring that they are reliable, complete and that they can thereby facilitate more effective communication and operations.  The fundamental problem identified during our audit—the absence of a systematic program of preventive maintenance and roof-repair at NYCHA—stems from ineffective internal controls at multiple levels of the organization, including outdated written procedures, broad noncompliance with existing procedures, poor record-keeping in both hard-copy form and in NYCHA’s IT systems, and overall inattention to roof-warranty administration and enforcement.

Audit Recommendations

This report makes a total of 27 recommendations, including that NYCHA should:

• Perform adequate inspections, preventive maintenance, and repairs in a timely manner to ensure that its roofs are protected by the manufacturers’ warranty coverage and can be kept in service throughout their expected useful life.
•  Investigate prolonged ponding conditions observed by the auditors on 14 building roofs to determine whether the roof insulation has been compressed from the weight of the membrane and standing water, whether the roof insulation has become saturated from leaks and has degraded, whether roof drains are clogged, and whether there are inadequate flows to roof drains.  NYCHA should consider using advanced moisture-assessment techniques such as thermal scanning to determine the extent of moisture accumulation.
•  Develop a comprehensive policy and procedures manual covering roof inspection, maintenance, repairs, and the preservation and use of warranty coverage, and provide it to appropriate staff, including all Development Superintendents.  In developing the manual NYCHA should consider consulting with subject matter experts, which might include the National Roofing Contractors Association (NRCA), real property management professionals, and roof manufacturers, to identify best practices and to consider whether new technologies may offer NYCHA opportunities to improve its performance of these responsibilities.
• Update the standard procedures that touch upon roof inspection, maintenance, repair, and warranty administration to reflect the organization’s current operational structure and/or processes.
• Ensure that applicable standard procedures that concern or touch upon record-keeping for roofs are consistently followed.  Specifically, designate RAMs or other appropriate officials to regularly review development-level records to ensure that each development maintains a complete file on its roofing systems, including but not limited to the warranty, invoices, and logs of all inspections performed, repairs that have been made to the roofing systems and contract information for the manufacturer or contractor who replaced the roof(s) at the development, and that the appropriate records are kept up-to-date in Maximo, NYCHA’s system of record for asset management.
•  Ensure that all IT systems are utilized effectively to realize full benefits of the investments and to help NYCHA management monitor maintenance and repair of its roof assets.

Agency Response

In its response, NYCHA stated that while it “agrees with most of the recommendations, it should be noted that IT enhancements, new project management system and electronic document storage were initiatives that were already underway, and NYCHA management was aware of some gaps in oversight.”

From a careful review of NYCHA’s response, it appears that NYCHA generally agreed with 24 of the 27 audit recommendations and disagreed with 3 of the recommendations (Recommendations 4, 26, and 27).