Mitchell-Lama applicants pay thousands, with ‘virtually no chance’ at getting apartments

New Yorkers forked over hundreds of thousands in fees to get on affordable housing wait lists with practically no chance of actually scoring one of those coveted homes, according to an audit by state Comptroller Thomas DiNapoli.

Investigators with the comptroller’s office found that “weak oversight” of Mitchell-Lama developments, along with property managers’ failure to return application fees, misled would-be tenants about their odds of landing an apartment and made fees susceptible to misuse.

The Mitchell-Lama program provides affordable housing to New Yorkers across the state; in the five boroughs, 93 of those developments are presided over by the city’s Department of Housing Preservation and Development (HPD), and include roughly 46,500 apartments. Hundreds of New Yorkers routinely compete for a handful of vacancies at a given complex, but that didn’t stop these developments from continuing to collect $200 application fees. HPD lowered that fee to $75 in August.

In a statement, DiNapoli said the audit points to “troubling flaws” with the city’s management of Mitchell-Lama developments. “Mitchell Lama is too important a provider of affordable housing to be undermined by the problems we’ve found,” DiNapoli said. “Collecting fees with virtually no chance for an apartment gives applicants false hope and compromises the program’s integrity.”

The audit zeroed in on application fees at three Manhattan developments: Trinity House, a rental development on the Upper West Side; Washington Square Southeast in Greenwich Village, a co-op; and York Hill on the Upper East Side, another co-op. There were 1,002 applications between the three buildings in 2013, 2016, and 2017; but just 23 residents were actually awarded apartments.

Property managers raked in more than $200,000 in fees from apartment hunters over those three separate years. If you include lotteries going back to 1997, the developments are holding more than $340,000 in fees for 1,706 applicants, according to the audit. Developments hold on to those fees while an applicant remains on a waiting list—unless the person withdraws their application or is denied—but it can take years, if not decades, before some actually snag an apartment.

DiNapoli made several recommendations in the audit, including for HPD to guide managing agents to account for application fees, handle refunds, among other things.

HPD said in a statement that it has resolved most issues that were brought up in the audit and that it’s taking additional steps to improve the agency’s processes.

“Mitchell-Lamas are a vital source of affordable housing for New Yorkers, and we’re pleased the audit revealed no instances where rules were violated,” Matthew Creegan, a spokesperson for the department, said in a statement. “Most of the issues raised in the report were resolved by the conclusion of the audit, and HPD has taken additional proactive measures to strengthen our processes.”