NYS Office of the Comptroller DiNapoli: Federal Housing Aid Going Unused Despite New York's Affordable Housing Crisis

 

Audit Finds State’s Affordable Housing Agency Should Maximize Use of Federal Housing Vouchers New York state’s affordable housing agency, Homes and Community Renewal (HCR) can do more to help low-income New Yorkers find housing by making full use of available federal funds for vouchers, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. “New York is in the midst of a housing crisis and Homes and Community Renewal’s management of its programs is critical to New York’s efforts to help individuals and families access affordable housing across the state,” DiNapoli said. “This audit found that HCR has not made full use of the federal funds that support vouchers and needs to maximize participation in the programs it oversees. Too many New Yorkers are struggling with housing costs to allow available resources to go unused.” DiNapoli’s audit examined a five-year period, from 2017 to 2021, which included the height of the COVID-19 pandemic when the need for affordable housing intensified. During that time, HCR administered about $9.4 billion in federal housing funds, including $6.8 billion for the Section 8 Performance-Based Contract Administration Program (PBCA) and $2.6 billion for the Section 8 Housing Choice Voucher Program (HCV). HCR received an additional $31.7 million from the Coronavirus Aid, Relief, and Economic Security Act (CARES) for the HCV. HCR also used about $47.2 million in CARES funding to administer the COVID Rent Relief Program.  HCV and PBCA help low-income households cover rent and homeownership costs through federally-funded vouchers. In addition to HCR, municipalities, including New York City, counties and towns administer HCV programs at the local level. DiNapoli’s audit found that improvements were needed in HCR’s administration of available vouchers and its management of reserves. HCR failed to take full advantage of the available Housing and Urban Development (HUD) authorized HCV vouchers. For every year from 2017 to 2022, HCR did not meet HUD’s standard that states should use at least 95% of vouchers it funds. The audit also found that the number of areas with low rates of voucher use has increased significantly since 2018. During State fiscal year (SFY) 2017-18, 30% of the state’s 53 areas receiving HCV funding through HCR used less than 95% of available vouchers. That percentage increased to over 76% in SFY 2021-22. In some areas of New York, voucher use fell far short of HUD’s performance threshold, with many areas, in both rural and urban communities, consistently utilizing less than 85% of their available vouchers. In Brooklyn (classified by HCR as part of “Eastern New York City"), it distributed about 82% of the available vouchers during that five-year period, despite high demand, as auditors found 99% of the families in that region that received vouchers used them to help with their housing costs. This contrasts with Schuyler County, where 99% of allocated vouchers were issued but only 87% of the vouchers were used by the families they were issued to. HCR also acknowledged that finding suitable housing has become more challenging but hasn’t fully investigated the specific reason why vouchers remain unutilized. In some areas, low rates of use are related to the lack of affordable housing, whereas in others it is related to issues with the local administration of the program. Determining the specific obstacles is a necessary first step for HCR to begin addressing the problems. Auditors also found that HCR had significant funding reserves that could have been used for housing subsidies and to increase participation in the programs. Auditors estimate that HCR could have used up to $36 million in surplus funds to fund up to 3,062 additional vouchers in 2021. Also, some of HCR’s excess administrative fee reserves (which doubled to about $131 million during the scope of the audit) could have been used to increase program participation including outreach activities and program awareness efforts, and to help participants find affordable housing. Auditors determined that HCR could improve how it addresses health and safety concerns in housing units where tenants are receiving rental assistance. Under HCV, local program administrators are required to conduct physical inspections of units under contract with HCR. Inspections are supposed to occur at a tenant’s initial occupancy and at least annually to determine if the unit meets HUD minimum housing quality standards (HQS). Local administrators are required to maintain a log of inspections that failed one or more HQS, submitting logs of failed inspections to HCR, remedying issues within certain time frames, and providing documentation of such to HCR. While HCR has developed some controls to monitor compliance with inspection standards, improvements are needed. Auditors found 36 instances where an owner and/or tenants failed to remediate deficiencies within the appropriate time frames, exposing tenants to prolonged safety risks. Deficiencies included no gas, exposed electrical wires, faulty carbon monoxide detectors and the presence of vermin. DiNapoli’s audit recommended that HCR: Determine what barriers are preventing the full use of HCV vouchers and funding. Increase use of available housing funds and prevent potential reduction or loss of federal funds, including but not limited to the increased use of reserve funds. Improve the reliability and usability of programmatic financial data by developing and implementing better IT systems. Strengthen oversight of Housing Quality Standards inspections to ensure that the problems they find are fixed within HUD’s timeframes and that inspection standards are consistent across local administrators. In its response, HCR officials generally agreed with most of the audit’s findings and recommendations except for the characterization of the HCV utilization findings. Audit Housing Trust Fund Corporation: Internal Controls Over and Maximization of Federal Funding for Various Section 8 Housing Programs and the COVID Rent Relief Program