Audit Report on the Section 8 Housing Choice Voucher Program of the Department of Housing Preservation and Development

AUDIT REPORT IN BRIEF

Section 8 is a federally funded housing subsidy program that offers low-income families the opportunity to choose and lease safe, decent, and affordable privately owned rental housing that they otherwise could not afford by providing additional, supplemental funds. In New York City , there are two public housing authorities that provide Section 8 housing vouchers: the Department of Housing Preservation and Development (HPD) and the New York City Housing Authority. Each awards vouchers and administers the program separately and differently. HPD currently administers vouchers for approximately 26,000 households.

This audit determined whether HPD properly accounted for the Section 8 funds that it received from U.S. Department of Housing and Urban Development (HUD) for the Section 8 Housing Choice Voucher Program (HCV Program) and appropriately disbursed funds to landlords on behalf of eligible families, in accordance with HUD and HPD guidelines.

Audit Findings and Conclusions

HPD properly accounted for the Section 8 funds that it received from HUD for its HCV Program, and it generally disbursed funds to landlords appropriately on behalf of eligible families. In addition, payments to landlords were generally made in accordance with HUD and HPD guidelines.

HPD, however, did not provide the files for five families of the 196 requested family files. Therefore, we could not determine whether the families in these cases were eligible to receive Section 8 benefits and whether HPD followed HUD and HPD guidelines. Moreover, our review of the 191 files that were provided revealed instances of files lacking required documentation: 107 files were lacking inspection checklists; 29 files had incomplete checklists; 24 files did not include suspension letters or follow-up inspection reports; and, 23 files did not contain documentation of rent reasonableness tests. As a result, we could not determine whether these families were eligible for benefits, whether landlords received appropriate payments, and whether required annual inspections and re-certifications were conducted, as required by HPD guidelines.

In addition, HPD made excessive Housing Assistance Payments (HAP) to landlords totaling $11,141, as shown in Appendix I, and $195,434 in questionable payments to landlords for 42 families, in which the lack of required documents prevented us from determining the appropriateness of these payments, as shown in Appendix II.

Thus, if our findings concerning the absence of files, the lack of and inaccuracy of information, and the excessive payments to landlords are projected to the 18,167 families that received Section 8 support in 2002, we estimate that $5,525,493 of $101,900,572 paid to landlords is questionable.

Audit Recommendations

We recommend that HPD make the necessary adjustments to the files for the seven landlords noted in this report and recoup the $11,141 in HAP payments that was incorrectly sent to them; investigate the 42 questionable payments detailed in this report and recoup any money due; and, review its files to determine whether any improper and questionable payments have been made other than those mentioned in the report, and recoup any money due.

In addition, HPD should maintain files for each family receiving Section 8 benefits. In this regard, HPD should ensure: that the files are not lost or misplaced; that documents necessary to determine eligibility, appropriateness of payments, and compliance with HUD and HPD regulations are included in the files; and, that all information in the files is accurate and complete. Finally, HPD should establish written procedures to ensure that all information entered into its computer system is accurate.