Update: This article was updated on June 16 at 11:31 a.m. to include a statement from New York State’s Homes and Community Renewal.
Two Mitchell-Lama housing complexes in the Bronx — the Findlay House in Morrisania and Jamie Towers in Castle Hill — were among four buildings flagged for unsanitary living conditions in a four-year audit by state Comptroller Thomas DiNapoli released on Thursday.
The two other Mitchell-Lama developments included in the audit were Cathedral Parkway Towers in Upper Manhattan and 753 Classon Avenue Housing Company in Brooklyn’s Crown Heights section.
The comptroller’s report uncovered an undercurrent of poor and underreported living conditions, such as mold and years-long deteriorating infrastructure, throughout all four developments.
Jamie Towers had stairwell doors and garbage chutes that did not close on their own, which poses a fire risk to tenants, as well as cracked walkways and an out-of-service elevator that has been flagged since 2020. At Findlay, a self-closing door at the building’s main entrance fails to close properly, which was a major factor in the tragic fire that killed 17 at the Twin Parks North West apartment complex in January 2022.
“Our auditors found that tenants are subjected to unsanitary, unacceptable conditions and that water leaks, collapsing ceilings, mold and other problems were left unaddressed sometimes for years,” said DiNapoli. “Homes and Community Renewal needs to improve its oversight of conditions at Mitchell-Lama buildings and monitor spending more closely. Tenants deserve nothing less.”
And instead of those conditions being fixed or addressed by private owners of these developments, the comptroller’s audit found that funds were used to instead secure bonuses and pay for parties, all while owners of the developments requested rent increases.
The comptroller’s office places a share of blame on the state’s Homes and Community Renewal (HCR) — whose Division of Housing and Community Renewal (DHCR) have had supervisory duties over Mitchell-Lama developments since 2010 — for failing to disclose conditions in the building or the financial activities of the managers of the building.
“This audit fails to acknowledge the limited role HCR has in overseeing the day-to-day management of Mitchell Lama housing which is privately-owned and operated. HCR’s highest priority is the safety and welfare of the low- and moderate-income tenants it serves, and HCR is committed to ensuring all state Mitchell Lama properties are well positioned to make critical investments including the four properties reviewed by auditors,” said Brian Butry, a spokesperson for HCR on Friday.
Butry told the Bronx Times that HCR helped rehabilitate 24,000 Mitchell Lama units, and invested more than $265 million for affordable housing preservation efforts over the past five years.
DHCR did dispute the findings of the comptroller’s report in a May 12 letter, but cited that the COVID-19 pandemic limited their ability to perform inspections and led to financial difficulties in maintaining the aging Mitchell-Lama buildings.
“At this time, all the Mitchell-Lamas that remain under DHCR’s supervision today were constructed over 45 years ago, leaving many with outdated building systems in need of upgrades, repairs or replacements,” wrote Jason Pearson, HCR’s senior vice president of statewide asset management. “Yet in most cases, the housing companies responsible for the management of these properties lack the financial and development expertise needed to effectively address the structural needs of these developments.”
Over the January 2019 to January 2023 audit timeline, the Jamie Towers, located at 633 Olmsted Ave, accrued more than 189 open violation related to mold and pests. The Findlay House, located at 1175 Findlay Ave., currently has 38 open violations relating to failure to address hazardous conditions in the building, per city records.
Findlay Houses is a 227-unit rental development for seniors, while Jamie Towers is a 720-unit cooperative. Classon — which had as many as 102 open violations from the city Department of Housing Preservation and Development in October 2022 — reserves its 142 units for hospital staff in the Brooklyn area, and Cathedral is a 309-unit rental for Manhattan families.
Since 1955, the Mitchell-Lama Housing program aims to provide affordable rental and cooperative housing to middle-income families. These developments are owned by private companies who enter agreements with agents who manage their buildings.
Mitchell-Lama development owners are responsible for physical and financial maintenance of the properties, while the agents manage the developments to ensure the owners’ responsibilities are met. Each development is expected to have a DHCR official that oversees and monitors the agreed-upon management plan.
However, the comptroller’s audit found that in three of the four properties – Cathedral, Jamie Towers and Classon – funds were not properly accounted for or were used for unusual purposes.
Jamie Towers and Findlay Houses are managed by First Services Residential and Prestige Management, respectively. Cathedral Parkway Towers and Classon are managed by Cathedral Parkway Towers Management and New Bedford Management, respectively.
In an audit of 280 financial transactions totaling approximately $1.9 million across the four developments, the comptroller’s office found that 139 transactions – totaling $1.5 million – were unrelated to normal operating expenses, such as building maintenance.
Jamie Towers included five transactions totaling $20,149 for unrelated expenses over the course of the four-year audit. In October 2021, the audit stated that Jamie Houses accrued $690,000 in debt to roughly 23 vendors.
According to the report, DHCR also reported inaccurate information to the various state government offices including the attorney general, state comptroller and state Legislature in their annual reports on the Mitchell-Lama Housing Companies.
Owners and managers at all four developments recently applied for a rent increase, despite the comptroller’s findings that they mismanaged and misappropriated funds.
State regulations, the comptroller’s office told the Bronx Times, allows DHCR to take certain actions, such as termination of contract, against the managing agent who manages the property on behalf of the owners.
“DHCR officials also identified hazardous conditions during their own visits, but often did not share their findings with the developments in a timely manner. Many of the unsafe conditions DHCR observed remained uncorrected, sometimes for years,” according to comptroller’s office.
DHCR is required to respond to the audit within 180 days, advising what steps were taken to implement the recommendations in the report, which includes annual site visits to the aforementioned developments and steps to correct the maintenance issues.
According to the comptroller’s office, this is the first in a series of audits on the physical and financial conditions at Mitchell-Lama developments statewide.
