Audit Report On The New York City Human Resources Administration’s Controls Over The Safety And Habitability Of Apartments For Families Receiving Rental Assistance

Executive Summary

The mission of New York City (City) Human Resources Administration (HRA)/Department of Social Services (DSS) is to fight poverty and income inequality by providing New Yorkers in need with essential benefits such as food assistance and emergency rental assistance.  In April 2016, as part of the City’s restructuring of HRA/DSS, the Mayor appointed the HRA Commissioner to also head the Department of Homeless Services (DHS), with both agencies operating under DSS.^[1]  The objective of this merger was to ensure that through integrated management for HRA and DHS, client services would be provided more effectively.

HRA’s Homelessness Prevention Administration unit works with DHS, and two HRA/DSS/DHS initiatives, Homebase, and Housing Assistance Providers (HAP), to help City residents in danger of losing their homes to either remain in them or otherwise avoid becoming homeless, and to help homeless New Yorkers transition from shelters to stable, affordable housing.^[2]  Through these sources, City residents in shelter or facing eviction can get emergency rental assistance in the form of rental assistance vouchers, help negotiating with a landlord, and help in finding alternative places to live to keep them from entering the shelter system.

Before an apartment is approved for a household with a rental assistance voucher to move into, the apartment and the building in which it is located must undergo two different reviews.  First, the building must pass a “preclearance check” which consists of a review of City records to determine whether there are outstanding violations that would disqualify the building from one of the City’s rental assistance programs.  Second, if the building passes the preclearance check, a physical examination of the apartment and building is conducted, which consists of either a walkthrough or of a more formal inspection, depending on the housing program providing rental assistance.

The results of the preclearance check and the physical examination—inspection or walkthrough—are then forwarded to HRA.  If the building and apartment pass both of those reviews, DHS staff or a contracted provider submits a packet with the required documents to HRA which identifies the prospective apartment the family wants to rent.  HRA will process the client’s packet and, if all requirements have been met, HRA will issue rental assistance payments to the landlord.

Prior to October 2018, HRA administered nine rental assistance programs designed for families with children, all of which required inspections or walkthroughs prior to approval: (1) HRA HOME Tenant-Based Rental Assistance (TBRA) Program; (2) Living in Communities (LINC) I; (3) LINC II; (4) LINC III; (5) LINC VI; (6) Pathway Home (PWH); (7) CityFEPS; (8) FHEPS; and (9) Special One-Time Assistance (SOTA).  (Details on these programs are provided in the Appendix to this report.)

In October 2018, HRA consolidated seven of its rental assistance programs, including four programs for families with children mentioned above (the LINC I, II, III, and CITYFEPS programs), together with three additional rental assistance programs for adults, the Special Exit and Prevention Supplement (SEPS) program, and the LINC IV and V programs,^[3] into a single program called the City Fighting Homelessness & Eviction Prevention Supplement (CityFHEPS) program.^[4]   Three programs that provide assistance to families with children, TBRA, SOTA and Pathway Home, continued to exist following the consolidation.^[5]  However, after consolidation, the audit focused only on CityFHEPS and did not look into changes that were made to TBRA, SOTA or Pathway Home.

During the period covering July 2016 through March 2018, HRA made over $88 million in rental payments for 7,475 families participating in rental assistance programs for families with children.

Audit Findings and Conclusions

The audit found that following the consolidation of seven rental assistance programs into a single program, CityFHEPS, HRA’s additional controls provide increased assurance that the apartments for which families were approved to receive rental assistance are free of conditions that violate applicable housing regulations.  However, while we found that HRA addressed many of the weaknesses we had preliminarily identified in our pre-consolidation review,  there continue to be certain program weaknesses that, if not resolved, increase the risk that HRA will provide rental assistance for apartments with substandard conditions.

In connection with the consolidated CityFHEPS program, after we brought certain concerns to HRA’s attention, HRA modified its procedures for preclearance checks to better ensure that the apartments for which rental assistance is being requested and the buildings in which they are located are not the subject of specified types of open violations, litigation, or vacate and stop work orders that HRA deems disqualifying.  Further, HRA implemented improvements in its procedures for apartment-review walkthroughs, including the use of a standard Apartment Review Checklist (ARC) to record the results of all CityFHEPS walkthroughs, rather than using the variety of different standards and checklists previously utilized.  If followed, the abovementioned improvements should provide HRA with additional assurance that the housing facilities approved for the CityFHEPS program are suitable for the families receiving rental assistance.

However, notwithstanding HRA’s efforts to improve its preclearance checks and its apartment-review walkthroughs, we identified several continuing control weaknesses that should be addressed to better ensure that the apartments included in this rental assistance program are safe and habitable and free of conditions that violate applicable housing regulations.  Specifically, we found that HRA: does not require that examiners submit supporting evidence of the results of the preclearance checks conducted; does not require that examiners submit photographs to support their assessments of the physical condition of apartments; and does not enforce the requirement that examiners use and fill out the standardized inspection checklist during DHS walkthroughs.  We also found that HRA does not require landlords to submit documentation of the results of the lead-based paint testing or evidence of the steps taken to remove the paint where applicable.

Audit Recommendations

To address the issues raised by this audit, we make the following five recommendations:

• HRA should require DHS and HPD staff performing preclearance checks to provide HRA with documentation of the results of the preclearance checks, such as a screenshot of the search results from each of the various websites checked.
• HRA should require that photographs of the housing conditions observed during walkthroughs be submitted as a visual record of the apparent suitability of the apartments.
• HRA should require that staff fill out the checklists during walkthroughs to ensure that all details are accurately recorded as the walkthroughs are being conducted.
• HRA should finalize and enforce its updated procedures governing the preclearance and walkthrough process to better ensure that: (a) staff are aware of their specific responsibilities; and (b) walkthroughs and preclearance checks are performed in a consistent manner in which all relevant issues are adequately addressed before the apartments are approved for participation in the rental assistance program.
• HRA should consider modifying its procedures and ensure that the owners of apartments for which families are applying for rental assistance submit documentation of the results of the lead-based paint testing or evidence of the steps taken to remove the paint, where the possibility of lead-based paint exists to better ensure the appropriate remediation work has in fact been performed.

Agency Response

In its response, HRA agreed or partially agreed with three of the audit’s five recommendations.  HRA disagreed with two recommendations pertaining to documenting the results of the preclearance checks and ensuring that apartment owners submit documentation of the results of the lead-based paint testing and evidence of the steps taken to remove the paint when applicable, stating that it was addressing the issues raised by the audit in ways other than those recommended.

[1] Although since 2016, HRA and DHS are both a part of DSS with a shared commissioner and certain administrative functions, they still have distinct programmatic functions and staff and so for the purpose of this audit report, we refer to each agency separately where their functions remain separate.

[2] DHS enters into contract with private providers to provide various services to help prevent homelessness and to assist those already in shelters.  Among their many responsibilities, Homebase and HAP providers refer clients to the rental assistance programs that are the subject of this audit.

[3] The Special Exit and Prevention Supplement (SEPS) program helps eligible individual adults and adult families without children at risk of entry to shelter and those already in shelter to secure permanent housing.  LINC IV assists single adults and adult families residing in shelter who are seniors or have disabilities and LINC V assists single adults and adult families residing in shelter and working, but who are unable to afford stable housing on their own.

[4] CityFHEPS includes three programs that were not initially part of the original programs for families with children—LINC IV and V and SEPS.

[5] After the consolidation, Pathway Home and LINC VI merged and are now known as Pathway Home.