Comptroller found that HPD was successful in ensuring that the primary housing goals of the Cornerstone Program were met. In 2000, HPD established the Cornerstone Program, a new construction initiative designed to expand private housing and increase the City’s affordable unit housing stock. The primary goals of the Cornerstone Program are two-fold: sell City-owned land, usually for a small fee, to encourage private residential development, and create affordable rental and homeownership units in specific neighborhoods. The City Comptroller audited HPD to determine whether the agency had made sure the primary goals of the Cornerstone Program were met in FY 2008.

The Comptroller found that, through the Cornerstone Program, HPD had encouraged new residential development, and to a smaller degree, expanded affordable housing. As of March 2009, 2,191 units had been completed under the Cornerstone Program. Of those, 22 percent were designated for lowincome families, 47 percent were designated for middle-income families, and the remaining 31 percent of units were market-rate units or unspecified. The Comptroller, however, found that HPD was unable to adequately assess the effectiveness of the program because HPD’s Production Credit System, which tracks all new multi-family developments, did not distinguish Cornerstone developments from non-Cornerstone developments, and did not track the number of started, completed, and affordable units being developed. (read more…)

HPD reports that an additional 1,139 affordable units are in the pipeline. At the Trends in New York City Land Use and Development forum co-hosted by the Center for New York City Law, HPD reported a total of 536 affordable units in construction and an added 1,139 units in the application phase as a result of the expanded inclusionary housing provisions.

The inclusionary housing provisions allow developers to increase the floor area of a development with an agreement to build affordable housing on the site or within another development. When the City first enacted the provision in 1987, it applied only to R10 zones and led to the development of 1,300 units of affordable housing. With the Greenpoint- Williamsburg rezoning, the City expanded the bonus provision to apply to lower density districts, and later applied the plan to cover Hudson Yards, West Chelsea, Brooklyn’s South Park Slope and Maspeth and Woodside in Queens. A plan to expand it to the Upper West Side and Fort Green and Clinton Hill in Brooklyn is in the application stages. (read more…)

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. (read more…)