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We completed a review of the New York City Housing Authority’s use of Federal funds. We selected this auditee based on a hotline complaint, case number HL-2011-0705, which alleged a pattern of waste, overspending, and abuse by the Authority. Specifically, the complaint alleged that the Authority (1) froze its Section 8 vouchers due to lack of available funds, (2) overpaid at least one housing manager with an annual salary of $187,000, (3) paid 51 defense attorneys more than $4 million annually, and (4) used Section 8 Federal funds to inefficiently lease office space. The objectives of the review were to determine whether the complaint alleging waste and mismanagement of Federal funds at the Authority had merit and whether there were indications that the Authority did not operate in accordance with HUD requirements.

Our review determined that although the facts of some of the allegations were substantiated, the four complaint allegations pertaining to waste and mismanagement of Federal funds at the Authority did not violate regulations and thus, required no further action. Authority officials confirmed that unoccupied space in 90 Church Street and 250 Broadway was the result of a reduction in employees and a mandatory cessation in hiring. Further, although the Authority compensated three of its commissioners with salaries and a resident board member with a stipend as allowed by New York Code for Public Housing, Authority officials did not have adequate documentation to support how the salaries were determined.

We recommend that the Director of HUD’s New York City Office of Public Housing instruct Authority officials to (1) conduct an office space assessment to determine whether it is cost effective to reallocate existing space at 250 Broadway and 90 Church Street; and (2) establish a written process regarding the assignment of its board of directors’ salaries to ensure that the Authority sets the salaries at reasonable levels and documents this process.