Problems found in HPD’s administration, inspections, audits and cost calculation for tax abatement program. On March 22, 2007, City Comptroller William C. Thompson issued an audit report on the Department of Housing Preservation and Development’s implementation of a tax abatement program, the J-51 Tax Incentive Program. The audit found problems with HPD’s handling of the program, specifically concluding that errors in cost calculations led to improper awards of tax benefits and incorrect fee assessments.

The J-51 program allows HPD to issue tax exemptions and abatements to building owners that rehabilitate residential properties or convert commercial buildings to residential use. Of the 56 properties sampled by the Comptroller, HPD improperly certified costs by $2.5 million and awarded 25 ineligible properties with tax benefits. In 21 percent of the properties, HPD calculated costs and set fees incorrectly. With required inspections, HPD failed to make seven out of 51 required inspections and problems occurred on 23 percent of completed inspections. The Comptroller also uncovered problems with HPD’s audit procedures. (more…)