By: Ilana Siyance
On Friday December 20th, the office of state Comptroller Thomas DiNapoli released an audit underlining not only how difficult it is for New Yorkers to land an affordable apartment in NYC, but also that landlords are reaping fees from applicants who will likely never have a chance at getting an affordable apartment.
The 26-page audit found that lax city oversight has enabled property managers at Mitchell-Lama or middle-income housing program buildings to collect applicant fees amounting to hundreds of thousands of dollars, from New Yorkers who have “virtually no chance” of scoring an affordable apartment in their lifetime. The report, which cited very slow turnaround times and long waiting lists, blamed the New York City Department of Housing Preservation and Development (HPD) as well as development managers for their failure to return fees to these applicants. The report says for years, applicants to the city’s Mitchell-Lama have neem obliged to pay over $200 for a spot on the waiting list for a subsidized apartment, despite the slender likelihoods. The continued fees not only misrepresents the chance applicants have of getting an apartment, but also produce a risk that application fees may be misused.
“My office has conducted several audits of the Mitchell Lama program and continues to find troubling flaws with its management and oversight,” DiNapoli said. “Mitchell Lama is too important a provider of affordable housing to be undermined by the problems we’ve found. Collecting fees with virtually no chance for an apartment gives applicants false hope and compromises the program’s integrity.”
The audit, which covers data from April 30, 2013 through July 10, 2019, revealed that out of over 1,000 applications in 2013, 2016 and 2017 only 23 residents were accepted for three buildings in Manhattan. As reported by Crain’s NY, that acceptance rate of 2.3 percent, is lower than Harvard’s rate of acceptance for incoming freshmen.
“Weak controls, low turnover, and lengthy waiting lists have resulted in a significant amount of fees not being returned to applicants,” the audit read. DiNapoli said there should be transparency in the turnover rates for Mitchell-Lama buildings, so that applicants can better evaluate their chances of getting an apartment prior to paying the fees. He also suggested that the size of waiting lists should be cut, so those without a reasonable chance won’t waste their time and money. He also recommended the HPD guide property managers on how to account for application fees, and handle refunds from lotteries based on a review of the waiting lists. As per the rule, if an application is denied, all the fees must be returned, but management companies can keep $50 of the $200 fee if the applicant withdraws. With the long lead times, the fees seem to be kept indefinitely. Some applicants have been waiting in vain for more than 20 years.
On the plus side, the report noted that this summer, the city lowered the application fee down to $75, which is incidentally the same price as an application to Harvard. “We were pleased that, as expected, the audit revealed no instances of fund misappropriation or violation of Mitchell-Lama rules, and that most of the issues cited were resolved by the time the audit report was issued,” wrote HPD Commissioner Louise Carroll in response to the audit. “As the report notes, we also proactively undertook a rule change reducing the application fee to $75 non-refundable, which will effectively address most of the report’s findings.”
