Objective

To determine the extent of implementation of the four recommendations included in our initial audit report, Controls Over Capital Improvements at City-Owned Homeless Shelters (Report 2018-N-3).

About the Program

The New York City Department of Homeless Services (DHS), an administrative unit of the New York City Department of Social Services (DSS), is the oversight authority responsible for providing transitional housing and services for eligible homeless families and individuals in the City and for fiscal oversight of the homeless shelters. DHS contracts with public and private entities in its mission to: prevent homelessness when possible; provide temporary, emergency shelter when needed; and help individuals and families transition into permanent housing. As of December 2022, there were 455 homeless shelters in the City, including 58 owned by the City, subject to DHS oversight.

Over the years, a significant number of City homeless shelters have fallen into disrepair, in some cases posing critical health and safety issues for residents and causing the temporary shutdown of facilities until they are habitable and the loss of much-needed space to accommodate a growing population. Prior audits have identified a range of substandard conditions that pose persistent dangers to the health and safety of this already vulnerable population. The City has addressed this issue with a marked increase in capital investment for shelter improvement projects. DHS’ capital budget is mainly used to repair and improve its shelters and other facilities. DHS’ fiscal year 2023 capital budget totaled about $73 million and included the costs of shelter renovations and equipment purchases.

Our initial audit report, which was issued on August 25, 2020, found that DHS lacked the necessary oversight and monitoring controls over City-owned homeless shelter capital improvement projects to ensure priority projects are brought to fruition timely and within budget. Specifically, across the areas examined, two key components of sound internal controls were either deficient or lacking altogether: DHS did not establish formal policies and procedures tailored specifically to its capital planning process to ensure consistent decision making across all projects and needed stronger monitoring to minimize delays and cost overruns. Of the nine projects in our sample, four remained on DHS’ capital plan – sometimes for years – before being initiated, five were not completed on time (ranging from 6 months to 4½ years late), and six exceeded their original budgeted cost by a total of approximately $9.7 million. Notably, one project, the East 119 Street project, was originally expected to cost $511,000, but exceeded its budget by $2.7 million.

Key Finding

HCR officials have made progress in addressing the issues identified in the initial audit report. Of the initial report’s six audit recommendations, four were implemented and two were partially implemented.

Key Recommendation

Officials are given 30 days after the issuance of this follow-up to provide information on any actions that are planned to address the unresolved issues discussed in this report.