New York State's Inspector General has belatedly blasted the Pataki administration for cavalier mismanagement of the State's Mitchell-Lama affordable housing program - including Westview on Roosevelt Island.
Auditors from the I.G.'s office chose Westview as one of three buildings examined closely to back up a charge of "Systemic Deficiencies in Mitchell-Lama Oversight" - one index heading in the 75-page report issued two weeks ago. Referring to the State Division of Housing and Community Renewal, the report said that the audit "revealed serious inadequacies in nearly every aspect of DHCR's Mitchell-Lama oversight."
In an executive summary, the report "concluded that DHCR's monitoring of Mitchell-Lama housing companies and its enforcement of its own regulations has been grossly deficient on a broad scale. Rather than safeguarding the integrity of the program, DHCR... has allowed housing companies to flout rules regarding apartment allocation, financial reporting, and contracting. DHCR's deep and systemic failures have resulted in deterioration of facilities, waste of taxpayer money, increase in charges to tenants, and the allocation of apartments to unqualified applicants at the expense of those legitimately entitled to those same apartments."
At Westview as well as at the other two New York City buildings chosen for close audit, "We found numerous instances of apartments being provided to individuals who were ineligible or had unfairly jumped ahead of others on the waiting list."
The I.G.'s audit was undertaken, and the buildings chosen for audit, largely in response to complaints - complaints the report said DHCR had failed to handle properly. The I.G. found that DHCR had no system for logging complaints, maintaining records of them, or recording the results of investigations, and that all too often, the subjects of complaints were asked to follow up on the complaints, effectively investigating and acquitting themselves on charges of violations of DHCR's rules, then losing the records of the complaint and investigation.
"Astonishingly, in 109, or 70 percent of the 156 tenancies" reviewed, the report says of all three buildings examined, "the housing companies had granted apartments despite the fact that the applications had not been submitted to DHCR for approval or had been submitted but returned as incomplete or denied... DHCR failed to detect or correct these irregularities because it neglected to enforce its own rules and properly train its staff," and "Further, DHCR failed to detect unauthorized residents... because it conducted so few audits of apartment rent rolls" even when a simple comparison of a rent roll against income affidavit submissions would show irregularities.
The current head of DHCR, Deborah VanAmerongen, signed off on an eight-page response to the report, listing "immediate, short-term, and long-term goals and strategies" developed to deal with the issues in the I.G.'s report "to restore public confidence in DHCR's supervision of the Mitchell-Lama program."
The DHCR response also says, It didn't happen on our watch: "While the report finds that certain employees broke the law and that others may have abused their position or neglected their responsibilities, please be assured that these isolated cases do not reflect the professionalism or work ethic of DHCR's 900+ workforce. Since the period covered by the report, new leadership has assumed responsibility for DHCR and senior staff is actively working to dispel any impression that the actions of those former employees reflect the conduct of any current staff members."
Westview's recent history and chain of responsibility for failures to observe DHCR's rules has been clouded by changes of management brought on by efforts of its owners to divest themselves of the project. When the Sheldrake Organization became a potential buyer in 2003-2004, management passed from Roosevelt Island Housing Management to a company chosen by Sheldrake; when the Sheldrake deal fell through, management moved to another entity - presently RY Management (RY stands for Ruppert-Yorkville), whose Island operations are headed by Jennifer Jones, the daughter of a former DHCR Assistant Commissioner. Responding to a WIRE query, Jones said, "The report of the New York State Inspector General was a review of the New York State Division of Housing and Community Renewal's oversight of the Mitchell-Lama program. With respect to the findings in Westview, R.Y. Management Co., Inc. is investigating each item and will address each one on a case by case basis. Nevertheless, R.Y. Management Co., Inc., has and will continue to manage Westview and Island House as per the Rules and Regulations of DCHR."
"At Westview," the I.G.'s report continues, we tested a sample of 37 tenancies whose postal change of address records did not coincide with tenant records at the complex. These 37 accounted for approximately 10 percent of the apartments... We found that 13 did not have DHCR approval for occupancy and 15 were not eligible according to regulations. The majority of the non-approved tenancies at Westview involved applications of relatives to take over the apartment lease...
"Of the tenancies that were examined at Westview, 10 involved [family member] succession rights. In none of these succession tenancies was an application submitted to DHCR for approval... We found that only two of the 10 had sufficient documentation to support a request for succession rights. Five... lacked sufficient proof that the succession applicant was a family member, and three lacked proof that the apartment had been the primary residence of both the tenant of record and the succession applicant for at least two years, as regulations require.
"For the period 1998 to 2006, we found that Westview submitted no succession applications to DHCR for approval. When we asked the current housing company manager about this situation, she said she believed that many housing companies... believe the right to succession is implied...
"We found 43 individuals in 33 apartments who appeared to have lived there... without appearing on the housing company's list of tenants... We found that 25 of these 43 individuals... had not been reported... on the income affidavit." The report observes that such activity creates a presumption of aggregate apartment income over the limits, which would result in surcharges and that, because the surcharges were not levied, allowing "violators to benefit from lower rents" at the expense of other tenants.
A broader investigation suggested that "for... 27 apartments whose residents we were not able to contact," there is the possibility that the apartments are illegally possessed and illegally sublet to non-approved residents who may not qualify as tenants under the income rules. "DHCR lacked procedures to check if the tenant residing in an apartment is the correct tenant. When we raised this issue with DHCR management staff, they said they viewed it as a housing company matter, not a DHCR problem, claiming that the... management agent is in the best position to verify continued occupancy eligibility..."
"At Westview, residents of two apartments submitted income affidavits indicating that the occupants earned over $500,000 per year. These tenants exceed the maximum allowable income by at least $200,000." Rents paid in these cases are $1,500 (two bedrooms) and $2,000 (three bedrooms).
"We found that warehousing of Mitchell-Lama units appeared to be occurring at Westview," where there is "a waiting list of more than 1,000 applicants. As of August 2006, the complex had 31 vacant apartments, each of which had been vacant for an average of 327 days." This warehousing was part of a Westview plan that would have led to an exit from Mitchell-Lama and profits for the owner. The I.G.'s report said that under the management selected by Sheldrake, vacancies rose from "three to five" to 27, "a rate of 7.5 percent."
The report says that, "In February, 2006, a Westview resident complained to DHCR about 'major warehousing of apartments,'" and says that while a DHCR field representative had noted the problem a year earlier, the representative had never referred the matter to DHCR management until the 2006 complaint came up. The report says DHCR took "no additional action until June of 2006, when a second complaint was received and after the Inspector General had begun this review." Four months later, the vacancy rate had grown to 8 percent.
In an e-mail, current DHCR chief Deborah VanAmerongen told The WIRE, "I am sure you know that since I assumed my position we have addressed the issue of renting vacancies at Island House and Westview."
VanAmerongen went on, "I am encouraged by the support I have received from staff here at DHCR, who work extraordinarily hard, but are dealing with outmoded systems and procedures, right up to the Governor's office, which knows that an effective DHCR is essential to further the affordable housing mission he has articulated."