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July 12, 2007


DiNapoli Says NYC Housing Program Needs to Tighten Controls:
Are Those Who Are Eligible Being Housed?

Commissioner Agrees to Management Changes

The New York City Housing Preservation Department (HPD) did not appropriately monitor its Neighborhood Homes Program, making the affordable housing initiative vulnerable to abuse, State Comptroller Thomas P. DiNapoli said following the release of an audit report today.

“This program is supposed to help New Yorkers achieve the American dream,” DiNapoli said. “Our audit was designed to ensure that the promise is being fulfilled. Unfortunately, we found there is simply no way to know if the program is working fairly. HPD Commissioner Shaun Donovan has been receptive to our recommendations. We’ll continue to monitor the program to make sure there are no detours for families looking to attain the American dream of home ownership.”

DiNapoli’s audit found HPD had insufficient monitoring to ensure:

  • Sponsors have marketing plans that communicate availability of program buildings
  • Potential buyers were selected by a fair, appropriately documented process
  • Existing tenants were given the first opportunities to purchase the buildings
  • Properties are sold only to New York City residents
  • Purchasers reside in the buildings they acquire for seven years

“These requirements exist for a reason,” DiNapoli said. “This program exists solely to benefit properly qualified New Yorkers. Without the appropriate paper trail, the effectiveness of this program is in question.”

Under the Neighborhood Homes Program, the City sells one- to four-unit buildings it has repossessed to non-profit “sponsors” for $1. HPD lends the sponsors up to $50,000 per unit to help finance rehabilitation efforts. Once rehabilitation work is complete, the sponsors sell the buildings to qualified New York City residents. Since the program began in 1998, HPD has transferred 325 buildings to sponsors and made more than $48 million in rehabilitation loans.

DiNapoli’s audit focuses on five sponsors that purchased 84 buildings between January 1, 2002 and December 31, 2005. During that period, HPD made approximately $14.2 million in loans available to the sponsors.

DiNapoli’s report outlines recommendations to make the program more accountable, including:

  • Requiring sponsors to prepare adequate, written marketing plans and document the homebuyer selection process to ensure fairness and compliance with formal marketing plans and ensure sponsors market buildings to existing tenants first
  • Providing sponsors guidance on determining homebuyer income eligibility
  • Ensuring that sponsors appropriately determine homebuyer income eligibility
  • Improving compliance with residency eligibility requirements

DiNapoli’s office is currently completing the second phase of its audit of HPD’s Neighborhood Homes Program.

Click here for a copy of today’s audit and HPD response


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