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DiNapoli audit critical of how federal funds are used to help low-income New Yorkers find housing

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  • Staff Report 

A new report by state Comptroller Tom DiNapoli says more can be done with federal funding to help low-income New Yorkers find housing.

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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.

“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.”

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.

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