New York City Department of Housing Preservation and Development

HomeWorks Program: Compliance with Selected Program Requirements

In the HomeWorks Program, which is administered by the New York City Department of Housing Preservation and Development, small, vacant City-owned buildings are transferred to developers for renovation and sale to eligible owner-occupants. Usually, several buildings in the same neighborhood are transferred to the same developer as a single project. If the aggregate sale price of the buildings in a project exceeds a certain agreed upon amount, the developer is to remit half the difference to the Department. This requirement is intended to promote affordable home prices in the project. However, we found that the developers often sold the buildings for higher prices than were initially agreed upon and did not always remit the full amounts due to the Department from these higher sale prices.

For example, when we examined the sale prices in six projects that accounted for most of the new activity in the Program between 2003 and 2007, we found that the actual aggregate sale prices exceeded the expected aggregate sale prices in five of the projects. On the basis of these higher than expected prices, the developers should have remitted the Department a total of $987,374; however, only $201,500 was remitted, leaving an apparent shortfall of $785,874. Department officials believed no additional amounts were owed by these developers, because their costs were higher than expected. However, the Department did not adequately verify the developersí claims of additional costs. We recommend such claims be verified.

The buildings are to be sold to buyers who meet certain eligibility requirements, and these buyers are to be selected in random lotteries. However, we found that buildings were sold to individuals who were either not eligible for the HomeWorks Program because they did not have the minimum required income/downpayment or whose income-eligibility was not documented. As a result, the risk of mortgage defaults increased. We also found that developers passed over eligible applicants to offer, and sell, buildings to other applicants with worse lottery numbers. We recommended that the Department strengthen its oversight of the developersí homebuyer selection process.

For a complete copy of Report 2007-N-20 click here.
For a copy of the 90-day response click here.