New York City Department of Housing Preservation and Development

Neighborhood Homes Program: Compliance with Requirements Relating to Profits on Building Sales (Follow-Up Report)

In the Neighborhood Homes Program, which is administered by the New York City Department of Housing Preservation and Development, not-for-profit housing development companies are to rehabilitate residential buildings that have been repossessed by the City and sell the buildings to owner-occupants. The companies are then required to remit to the Department a certain portion of any profits from the sales.

In audit 2006-N-13, we audited the companiesí compliance with this requirement and found that the Department had received less than 25 percent of its share of about $1 million in profits owed by four companies. The companies indicated they did not remit the required profits because of cost overruns and taxes owed for buildings under rehabilitation. However, the Department did not verify the companiesí reasons for retaining the profits. We also identified weaknesses in the Departmentís controls over the collection of such profits. We recommended that the Department recover the profits owed and institute adequate controls over the collection of this revenue. When we followed up on these matter with Department officials, we found that they had made some progress in implementing our audit recommendations, but additional progress was still needed.

For a complete copy of Report 2009-F-6 click here.