Comptroller: NYC paying slumlords millions to house homeless


NEW YORK-At a time when Mayor Michael Bloomberg and Governor David Paterson are putting forward budgets that slash programs proven to alleviate homelessness, the Department of Homeless Services is wasting millions of dollars on services that lack oversight, some of which are overtly illegal, according to recent audit of the DHS.

As the homelessness crisis gets worse, the DHS is paying slumlords as much as $4,836 per month, or $58,032 per year, in unregulated housing that likely wouldn’t even be considered safe were it to be inspected.

According to City Council Member Ydanis Rodriguez, D-Manhattan, the DHS “must shape up if it is to provide real and valuable services to those who are being hit hardest by the recession.”

Currently, the homeless rate in the city is at a record high, with 39,000 people in shelters. At the same time, the annual State of the Homeless report, issued by the Coalition for the Homeless, Governor Paterson’s state budget will slash a record $104 million from the city’s adult shelters, homelessness prevention services and permanent housing.

“Twenty years ago, when I started working at Coalition for the Homeless, we were bringing hot meals into the notorious welfare hotels,” executive director of CFH Mary Brosnahan said at a press conference staged by city Comptroller John Liu, whose office conducted the audit. “There were countless press exposés on the conditions in those hellholes and a resounding cry went out to close those places. New Yorkers across the political spectrum demanded that their tax dollars not be used to subsidize squalor.”

But even though most people assume that the city “has gotten out of the business of paying slumlords,” she said, it continues “to shelter vulnerable homeless children in horrible conditions-and it’s us, the taxpayers, who are footing the bill.”

According to the audit, the Department “failed to monitor service providers, leaving individuals and families in hazardous, unsanitary and substandard conditions wrought with open violations.”

In 2003, when the local news exposed private landlords raking in huge amounts of taxpayer dollars to house people in squalid apartments, an outraged public demanded that the city stop both endangering families and throwing money at slumlords.

Bloomberg promised to do something. The audit shows he has not.

Instead of signing contracts with service providers, DHS entered into “handshake agreements,” and paid providers, in open violation of the city’s Administrative Code and the City Charter, from an agency bank account. These payments to non-contracted providers accounted for $152.7 million to 107 providers. Altogether, the agency only used 154 providers. All told, 53 percent of units being used to house homeless families were not contracted.

Further, Liu’s audit found that the agency made payments to some providers for no reason at all, and the amount paid per family, even to the same provider, Tilden Hall Family Residence, varied wildly between $810 and $4,836 per family each month. In total, the agency paid $953,635 to this agency, “using duplicate lists of clients and service dates and invented rates as ‘data’ to support and justify the payments.”

In lieu of contracts, the agency used an “honor system” with its providers. The service provider simply gave the DHS a list of fees and the agency paid it without checking. The audit found duplicate payments amounting to $25,918 and $23,866 in payments for services that were likely never even rendered.

“Who would go into business on an ‘honor system’?” Comptroller Liu asked at the press conference. “How a city cares for its most vulnerable speaks volumes about its people, and we’re better than what we show ourselves to be.”

After issuing the results of the audit, which began under Liu’s predecessor William Thompson, Liu said the DHS should systematize its dealings with service providers, enter into contracts with all of them, and pay for services based upon mutually agreed rates.

In order to ensure that the homeless are not being placed into dangerous dwellings, Liu suggested that the department should “conduct unannounced periodic site inspections and interviews with clients and staff.”

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