NEW YORK, NY - The New York City Housing Authority has badly mismanaged a program that requires vendors doing business with the agency to use a portion of the contract to hire public-housing residents, according to a devastating audit being released Thursday by Controller William Thompson. It's bad news for a housing agency already reeling from a recently passed city budget that deepens a chronic funding shortfall.
And it's another example of how one of the city's most important agencies is slowly but surely losing control over key functions that more than 400,000 tenants regularly rely on. Under the Resident Employment Program, or REP, launched in January 2001, all construction and building maintenance contracts over $500,000 are required to spend at least 15% of labor costs to hire unemployed public-housing residents.
Properly managed, the program was intended to create lots of job opportunities for housing residents: In Fiscal Year 2007, there were 52 REP contracts totaling more than $109 million. Steering maintenance and construction work to unemployed or low-income residents isn't just charity: NYCHA's rent is based on each tenant's income, so helping residents find work amounts to getting more rent money - something NYCHA desperately needs to do.
But the audit being released Thursday - a followup to a 2004 audit by Thompson - found that "a serious lack of NYCHA management oversight and commitment to the REP program resulted in program goals not being achieved, NYCHA allowed contractors to largely ignore the REP provision of their contracts."
Auditors looked at a sample of six randomly selected contracts in which private firms engaged by NYCHA spent a total of more than $1.5 million on labor expenses. Under the 15% rule - a hard-and-fast requirement - the contracts should have generated more than $227,000 in pay to jobless public-housing residents.
But the audit found just over half that amount was actually paid, to a grand total of 10 residents. And although none of the six contractors met the 15% requirement, no sanctions were imposed on any of them. Lax oversight of the program is a constant theme running through the Thompson report. "By not monitoring the residents hired to work at NYCHA construction sites, the agency is allowing contractors to report resident hires who may not be actually working," the audit says.
NYCHA's response to the audit was tepid and troubling. The agency doesn't seriously challenge Thompson's central allegation that contractors have been allowed to ignore hiring requirements with impunity. "Overall, the REP program did not appear to be a high priority for the administering departments," the audit finds.
Requiring contractors to hire public-housing residents is common sense, a way to make sure a minimal percentage of NYCHA dollars go to tenants so they can pay rent, take care of their families and spend money in and around the projects.
As NYCHA falls deeper and deeper into the red, the agency has been cutting back on maintenance, security, sanitation and other basic services, and is widely expected to close as many as half of the 147 senior centers in various developments.
Despite the budget crunch, the agency must do a better job of enforcing its own contracting rules. One idea worth considering is to hire an audit firm to monitor compliance (NYCHA has disbanded its own contract compliance unit), paid for, in part, by fines imposed on firms that violate hiring requirements and other contract terms.
NYCHA could even ask the city controller's office to step in and monitor the contracting system. The agency can't afford to waste a key resource - one its residents are entitled to - when it doesn't have a penny to waste.
Source: NY Daily News