Division of Housing and Community Renewal
Management Practices at Co-op City
The Division of Housing and Community Renewal (Division) oversees New York State's
middle-income housing program, which includes 94,670 apartments in 242 housing
projects built under the Mitchell-Lama Law. These housing projects were built
through public financing, but are owned and maintained by private housing companies.
The largest of these projects is Co-op City, which houses more than 50,000 residents
in the Bronx and is owned and operated by Riverbay Corporation. We examined selected
aspects of the management practices at Co-op City and found that members of Riverbay's
Board of Directors, or committees established by the Board, repeatedly interfered
in the day-to-day financial operations of Co-op City. Because of such interference,
proper competitive bidding procedures were not always used when contracts were
awarded. For example, a $1.3 million contract for insurance services was awarded
to a firm that was allowed to change its proposal after sealed competitive bids
were opened. A member of the Board's purchasing committee, who is an insurance
broker, was paid $90,000 by the firm receiving the contract for his assistance
in securing the contract, and we found no indication that this possible conflict
of interest was disclosed. We believe some of the Board's interference could
have been prevented if Riverbay had been monitored more closely by the Division.
We also found that Riverbay does not actively try to collect unpaid rent from
all commercial tenants. We recommend that the Division more closely monitor Riverbay
operations, and ask the Attorney General's Office to investigate the contract
for insurance services.
For a complete copy of Report 96-S-44 click here.
For a copy of the 90-day response click here.