STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER Office of the State Deputy Comptroller for the City of New York. H. Carl McCall State Comptroller

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1 STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER Office of the State Deputy Comptroller for the City of New York H. Carl McCall State Comptroller NEW YORK CITY DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT OVERSIGHT OF MITCHELL-LAMA HOUSING DEVELOPMENTS NEEDS TO BE STRENGTHENED TO ENSURE THAT RESERVE ACCOUNTS MEET FUTURE NEEDS April 19, 1995 A-9-94

2 STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER 270 BROADWAY NEW YORK, NEW YORK H. CARL McCALL STATE COMPTROLLER April 19, 1995 The Honorable Deborah Wright Commissioner New York City Department of Housing Preservation and Development 100 Gold Street New York, New York Re: Final Report - Oversight of Mitchell- Lama Housing Developments Needs to Be Strengthened to Ensure That Reserve Accounts Meet Future Needs, No. A-9-94 Dear Commissioner Wright: This audit was performed pursuant to the State Comptroller's audit authority as set forth in the State Constitution, the State Finance Law and the General Municipal Law. The audit focused on determining if the Department of Housing Preservation and Development (HPD) was adequately monitoring Mitchell-Lama housing developments under its jurisdiction to ensure that these developments funded their reserve accounts at required levels. Such reserve accounts are needed to ensure that money is available for future repairs and capital improvements. This report was prepared under the direction of Allen M. Vann, Audit Director. Major contributors to the report are listed in Appendix D. Office of the State Comptroller Office of the State Deputy Comptroller for the City of New York

3 CONTENTS EXECUTIVE SUMMARY... ES-1 CHAPTER I. INTRODUCTION...1 Objectives, Scope and Methodology... 1 CHAPTER II. HPD DOES NOT ENSURE THAT HOUSING COMPANIES ADEQUATELY FUND THEIR RESERVE ACCOUNTS...3 Absence of HPD Recordkeeping System...3 Underallocation of Reserves for Fiscal Year Historical Underallocation of Reserves...5 Lack of Adequate HPD Enforcement and Monitoring...6 Recommendations...8 Agency Response and Auditor Comments...8 APPENDIX A METHODOLOGY APPENDIX B APPENDIX C SCHEDULE OF REQUIRED AND ALLOCATED RESERVE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, SCHEDULE OF CUMULATIVE REQUIRED AND ALLOCATED RESERVE FUNDS AS OF JUNE 30, APPENDIX D MAJOR CONTRIBUTORS TO THIS REPORT... 16

4 NEW YORK CITY DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT OVERSIGHT OF MITCHELL-LAMA HOUSING DEVELOPMENTS NEEDS TO BE STRENGTHENED TO ENSURE THAT RESERVE ACCOUNTS MEET FUTURE NEEDS EXECUTIVE SUMMARY PURPOSE The purpose of this audit was to determine whether the Department of Housing Preservation and Development (HPD) was adequately monitoring Mitchell-Lama housing developments under its jurisdiction to ensure that these developments funded their reserve accounts at required levels. Such reserve accounts are needed to ensure that money is available for future repairs and capital improvements. BACKGROUND HPD is responsible for overseeing the operations of Cityassisted Mitchell-Lama housing developments. There are 58 developments, with 30,855 apartments, under HPD's supervision. The developments are required to set aside reserve funds based on formulas described in HPD's Rules and Regulations. HPD requires that each development be audited every year by a certified public accountant (CPA), and that the financial statements include information regarding the current level of funding of these reserve accounts. RESULTS IN BRIEF HPD has a long-standing policy of allowing Mitchell-Lama developments under its jurisdiction to forgo the funding of reserves. The policy has resulted in many developments having insufficient reserves to meet future repair and capital improvement needs. As of June 30, 1993, only about 60 percent of the $52 million required for reserves by the 58 HPDsupervised developments had been funded. HPD has not performed a study to evaluate the financial impact of its allowing developments to forgo the funding of reserves. ES-1

5 We found no evidence that HPD determined the financial impact of allowing the developments to underfund reserves. Consequently, the City may be asked to provide further funds to these developments to make necessary repairs and replacements. HPD property managers do not maintain a recordkeeping system to track reserve funding requirements and funding levels. Instead, they rely solely on the information contained in each development's financial statement. We noted the statements for ten of the 58 developments did not contain required reserve information. No steps were taken by HPD to require compliance. Since the inception of the Mitchell-Lama program, HPD has used the same formula to calculate reserve requirements. On the State level we found that the Division of Housing and Community Renewal (DHCR) uses a reserve funding formula for the Mitchell-Lama developments under its jurisdiction that may provide a more realistic estimate of funding requirements. We recommend that HPD consider using the DHCR formula. A March 29, 1995 report issued by the Office of the State Comptroller (Report No. 92-S-86) stated that the Mitchell- Lama companies supervised by DHCR will also be unable to fund future large repair bills unless they properly fund reserve accounts. ES-2

6 AGENCY RESPONSE AND AUDITOR COMMENTS We made five recommendations towards improving HPD's monitoring and enforcement of reserve fund requirements. HPD, in response to our draft report, agreed that historically reserves had not been funded, and indicated that as Mitchell-Lama developments request rent/carrying charge increases it will ensure that the increases cover funding of reserves or capital repair needs. Excerpts of HPD's response have been included in the text of this report along with our own comments. A complete copy of HPD's response will be provided upon request. ES-3

7 NEW YORK CITY DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT OVERSIGHT OF MITCHELL-LAMA HOUSING DEVELOPMENTS NEEDS TO BE STRENGTHENED TO ENSURE THAT RESERVE ACCOUNTS MEET FUTURE NEEDS CHAPTER I. INTRODUCTION Mitchell-Lama housing companies were created under the 1961 State Limited-Profit Housing Companies law that was enacted to address a "seriously inadequate supply of safe and sanitary dwelling or non-housekeeping accommodations for families and persons of low income...." The New York City Department of Housing Preservation and Development's (HPD) Division of Housing Supervision, is responsible for overseeing the operations of 58 Mitchell-Lama housing companies. The Division requires that its three property managers, among other duties, perform annual physical inspections and administrative audits of the individual housing companies (also known as developments), review monthly reports from the housing companies, and assure that they are adequately funding their reserve accounts. The 58 developments are made up of 35 co-operative apartment developments (with 17,112 units) and 23 rental apartment developments (with 13,743 units). The residents of each development hire a managing agent to run the day-to-day operations. Objectives, Scope and Methodology The objective of this audit was to determine whether HPD was adequately monitoring the 58 Mitchell- Lama housing developments to ensure that they are funding reserve accounts at required levels. Such reserves are set aside for major repairs and capital improvements at levels required by HPD regulations established at the beginning of the Mitchell-Lama program. During the course of our audit we learned that HPD does not maintain its own records of the housing companies' reserve fund balances. Consequently, we relied on the annual and six-month statements prepared for each development by certified public accountants (CPAs), which were supposed to contain this information. We obtained the most recent statements available at the time of our field work. Fifty-five of these were for the period ended June 30, 1993, and two were for the period ended December 31, No statement was available for one development. -1-

8 To calculate both the required and actual reserve funding levels for each of the 58 developments, we used the information provided to us by the managing agents of each development in response to a questionnaire we sent to them, as well as information in the annual statements. Also, we evaluated the steps HPD takes to ensure housing company compliance with HPD regulations. Our initial audit scope included a review of HPD's oversight of the contracting practices used by the managing agents of the housing companies, as well as a review of HPD's performance of the required annual physical inspections. During the course of the audit we learned that the Manhattan District Attorney's Office was conducting an industry-wide investigation of the contracting practices of managing agents. Based on discussion with a representative of that Office, we agreed to limit the scope of our audit by forgoing reviews of both HPD's oversight of the managing agents' contracting practices and its performance of the physical inspections, to avoid interference with the District Attorney's investigation. During our audit period, the Assistant Deputy State Comptroller for the City of New York served as a member of the Board of Directors of one of the Mitchell-Lama developments supervised by HPD. Upon the commencement of this audit, she recused herself from having any role in the performance of this audit or other work of the Office of the State Comptroller relating to the affairs of the Department of Housing Preservation and Development's Division of Housing Supervision during the time of her service as a Board member of her development. Therefore, her name has been removed from all documents to which this report applies. This disclosure is being made to allow readers of this report to make their own judgment on any perceived impairments affecting their ability to rely on the contents of this report. With due consideration to the matter described above, our audit was conducted in accordance with generally accepted government auditing standards. Audit field work was conducted between January 11, 1994 and August 22,

9 CHAPTER II. HPD DOES NOT ENSURE THAT HOUSING COMPANIES ADEQUATELY FUND THEIR RESERVE ACCOUNTS HPD has a long-standing policy of allowing most of the Mitchell-Lama developments under its jurisdiction to forgo the adequate funding of reserves. The policy has resulted in many developments having insufficient reserves to meet future repair and capital improvement needs. As of June 30, 1993, only about 60 percent of the $52 million required of the 58 HPD-supervised developments had been funded. HPD has not performed a study to evaluate the financial impact of its allowing developments to forgo the funding of reserves. A March 29, 1995 report issued by the Office of the State Comptroller (Report No. 92-S-86) stated that the Mitchell-Lama companies supervised by the Division of Housing and Community Renewal (DHCR) will also be unable to fund future large repair bills unless they properly fund reserve accounts. Absence of HPD Recordkeeping System HPD's property managers do not keep their own records of the reserve requirements and actual reserve fund levels of each housing company but instead rely on information provided in the annual and semiannual statements prepared by certified public accountants for each of the housing companies. 1 There is no assurance that the reserve requirements calculated by the CPAs are accurate. Generally Accepted Auditing Standards relating to audits of Common Interest Realty Associations (CIRAs), as issued by the American Institute of Certified Public Accountants (AICPA) in its CIRA Audit Guide, require that information regarding reserve requirements and funding levels be disclosed in the CPA's audit report. We reviewed the statements submitted by 57 of the 58 developments monitored by HPD. (Bedford Gardens in Brooklyn was involved in an ongoing dispute with HPD and refused to submit a report to HPD.) Only 47 of the 57 statements contained information about the reserve fund. The other ten statements did not indicate a reason for the lack of information. 1 According to Article VII of the Rules and Regulations Governing City-Aided Limited Profit Housing Companies (Rules), "HPD shall conduct audits and review of the housing company financial operations...to facilitate the examination of data, the following records shall be maintained...(a)n annual audited financial statement and a semi-annual unaudited financial statement which shall be prepared for and submitted to HPD no later than ninety (90) days from the end of the fiscal period." -3-

10 According to HPD's Rules and Regulations Governing City-Aided Limited Profit Housing Companies (Rules), each housing company is required to fund a reserve account for painting and decorating, 2 replacements, and vacancy and collection losses and contingencies. The Rules require that HPD monitor the funds allocated to each development's account. Article XXIV, sec. 1 of the Rules allows HPD to waive any of the rules or regulations at its sole discretion. The certified public accountants that prepared nine of the ten statements that did not contain the required reserve information advised us that HPD had waived the reserve requirements for the nine developments. We attempted to confirm this with HPD officials but were told that the agency did not have records supporting these decisions, some of which were made as long as 30 years ago. Underallocation of Reserves for Fiscal Year 1993 In fiscal year 1993, only $4 million of reserves were funded. Using HPD's funding formula, we determined that $9.2 million should have been funded. We computed the required reserve allocations for fiscal year Our methodology is described in Appendix A. Our analysis showed that the 58 developments had a total reserve underallocation of $5.2 million. Forty-eight of the 58 developments had underfunded their fiscal year 1993 reserve requirements. (See Appendix B.) Those with the largest reserve shortfalls for 1993 were Kew Gardens Hills ($526,591), Manhattan Plaza ($492,774) and Waterside ($447,119). To meet their 1993 reserve requirements, the 48 developments would have had to increase each apartment's monthly carrying charge an average of 3.5 percent ($19) to make up for deficiencies in funding reserves. We made this determination by dividing the total 1993 reserve fund shortfall by the total rent roll for that period. Needed increases ranged from a low of 0.6 percent ($6) at Ruppert- Yorkville Towers, to a high of 11.4 percent ($34) at O.U.B. Houses. These monthly increases would 2 According to Article VIII of the Rules, the following formulas apply: C C For cooperative housing companies there must be a reserve for replacements ($10 per rental room per year, plus interest earned on all reserve fund investments), a reserve for painting and decorating ($25 per dwelling unit per year), and a reserve for vacancy and collection losses and contingencies (3 percent of the rent roll until the accumulation in this reserve is equal to 25 percent of the rent roll; and thereafter such deposits as are necessary to maintain the reserve at the stated level). For rental housing companies there must be a reserve for replacements (stoves and refrigerators at $15 per rental room per year, dishwashers at $40.50 per apartment per year and air conditioners at $75 per air conditioner per year, plus interest earned on all reserve fund investments, where applicable), a reserve for painting and decorating ($35 per rental room per year), and a reserve for vacancy and collection losses and contingencies (3 percent of the rent roll, until the accumulation in this reserve is equal to 25 percent of the rent roll; thereafter, such deposits as are necessary to maintain the reserve at the stated level). -4-

11 also provide the additional funds for full allocation of reserves in subsequent years. (These increases address only the annual underallocation of reserves and do not resolve the cumulative underallocation caused by not funding such accounts.) The table below indicates the average monthly increases per apartment needed by the developments with the most housing units: 1993 Average Increase Average Monthly as Percent Development Monthly Increase of 1993 Name Charge Needed Charge Franklin Plaza $ 471 $20 4.2% Linden Plaza % Lindsay Park % Luna Park % Manhattan Plaza 1, % Historical Underallocation of Reserves Our analysis revealed that the total underallocation of reserves for the 58 developments since they were first occupied was $21.2 million. The total amount of reserves that should have been accumulated was $52.2 million, while only $31 million, less than 60 percent of required reserves, was actually funded. Using HPD's reserve funding formula and information provided in response to our questionnaires, we determined that the cumulative underallocation of reserve funds for all 58 developments was $21.2 million. Our estimate is understated because we could calculate only the fiscal year 1993 total underallocation for 11 developments (the ten whose annual statements did not include reserve fund information and Bedford Gardens whose statement was not available). It should be noted that the cumulative underallocation of reserve funds is based upon the amounts disclosed by the various CPA firms in their fiscal year 1993 statements. The reported reserves relate to years as early as We did not confirm the accuracy of the cumulative amount reported through Of those developments which provided cumulative reserve fund balance information, those with the greatest cumulative underallocation were Big Six Towers, Kew Gardens Hills and Luna Park, each of which was over $2 million deficient. Appendix C details the cumulative over- or under-allocation of reserves for each development. -5-

12 HPD officials conceded that housing developments have not been fully funding their reserve accounts but maintained that underfunding has not resulted in developments falling into disrepair. The Assistant Commissioner of HPD's Division of Housing Supervision stated that "you must take into account politics and the economic situation... there has always been a policy at HPD to fund current needs first before worrying about future needs." However, these developments are now up to 30 years old, and will most likely need funds for major repairs and replacements in the near future, making the underfunding of reserves a more critical concern. Companies without reserves may have to resort to borrowing, which could be a costly alternative. Moreover, the lack of adequate reserve funding only shifts the burden for major expenditures to future residents of the developments and maintains the monthly charges of the current residents at lower-than-appropriate levels. As of June 30, 1993, 27 of the 58 housing companies had no funds set aside for reserves. Ten of these 27 had outstanding City-provided loans totalling $5,746,107 as of this date. Such loans were provided by the City at below-market interest rates (some as low as 1 percent per year) to make capital repairs or improvements that reserves should have covered. Had HPD enforced the reserve funding requirement at these developments, it might have saved the City the interest expense and administrative costs of making the loans. In response to our draft report, HPD's Commissioner indicated that she believed linking the underfunding of reserves and the need for government loans was misleading. She mentioned that even if reserves had been fully funded many of these projects still would have sought additional financing. We believe that the need for loans would have been reduced had these same developments fully funded their reserves over the course of the years. While the above $21.2 million underallocation is based upon a 30-year old formula which should be reviewed (and possibly replaced with a methodology that more accurately reflects the funding needs of the developments), this underallocation highlights weakness in many developments' abilities to cope with short-term replacement needs. Regardless of what funding formula is used, developments with either no or inadequate reserves may not be able to meet future needs. Lack of Adequate HPD Enforcement and Monitoring HPD has had a long-standing policy of not closely monitoring the extent to which its Mitchell-Lama developments fulfill HPD's reserve requirements, and not enforcing the requirement. -6-

13 Housing companies have been allowed to forgo funding their reserves. While HPD's regulations allow for a waiver of any regulation, there is no evidence that reserve fund requirements were waived for any of the developments we examined. No risk assessment was ever conducted of the impact that waivers would have on the financial stability of these developments. The HPD Assistant Commissioner told us that waivers of the funding were initially granted when the developments were new and major repairs, replacements and capital improvements were not expected in the immediate future. He also indicated that the requirement to establish reserve funds was waived on a case-by-case basis due to tenants' pressure to keep rent increases low. The granting of these waivers was not documented. HPD responded to our draft report that, given the passage of time, a lack of written support for these decisions is not surprising. The HPD Assistant Commissioner also informed us that HPD had begun, in calendar year 1994, to enforce the reserve requirement on a case-by-case basis as developments submitted requests for increases in monthly rentals and carrying charges. He stated that when HPD analyzed these requests it would calculate what is needed for current expenditures and to fund reserves. After the completion of our fieldwork, we were provided documentation showing that such reserve account funding was considered during this analysis. However, there was no mention of why developments that have not requested increases in monthly charges are still allowed to forgo full funding of their reserve accounts. Since the CPA statements for fiscal year 1994 had not been submitted before completion of our field work, we could not determine if HPD's actions have resulted in an increase in reserve funding. The AICPA CIRA Audit Guide (page 42.12) requires that the CPA statement include an estimate made by the housing company of the extent and cost of future repairs and replacements, or note that such an estimate had not been made. Fifty-six of the 57 available CPA statements had no such estimate. In fact, 34 statements did not even mention the requirement. HPD could have used these estimates to determine whether to waive or decrease the reserve fund requirements for individual developments. Since the estimates were not made, and in fact not required by HPD, the agency did not have sufficient information to support its contention that the developments did not need to fund the reserves. The New York State Division of Housing and Community Renewal (DHCR) administers 253 Mitchell-Lama developments (with 98,669 dwelling units) and has a reserve requirement for the same categories of expenditures as HPD. It bases its reserve funding requirement on its analysis of physical 3 condition surveys prepared for each development by a qualified technical consultant. We asked HPD if it had considered making such a physical survey the basis for determining reserve fund needs. 3 9 New York Codes, Rules and Regulations, Section (f). -7-

14 HPD's Assistant Commissioner informed us that HPD "will have to revise the formulas because the rates used are too low and have to be raised." He said that he would contact both DHCR and the U.S. Department of Housing and Urban Development (HUD) to study their methods of setting reserve fund requirements. The DHCR reserve fund methodology may provide a more realistic estimate for determining the amount of reserves needed in the foreseeable future as it is based on the actual future needs of the developments. Not having such information means that HPD will continue relying on a formula to fund reserves which may not be reflective of a development's future needs. Recommendations The Department of Housing Preservation and Development should: 1. Keep up-to-date records of each development's reserve fund and monitor compliance with reserve fund requirements. 2. Ensure that annual statements prepared for the developments by certified public accountants accurately reflect reserve fund activities. 3. Require that all developments fund reserve accounts at appropriate levels. 4. Ensure that the annual statements for each development contain an estimate of the cost of future repairs and replacements. 5. Review its method of determining reserve fund requirements, and consider using the methodology of the New York State Division of Housing and Community Renewal. Agency Response and Auditor Comments In response to our draft report, HPD agreed that historically reserves have not been funded, and described actions being taken to ensure funding at certain developments. HPD indicated that since 1993 rent increases for 20 developments have included funding for reserves, and that it will continue to require funding of reserves as rent and carrying charge increases go into effect. We believe HPD needs to act more aggressively to ensure that reserves are funded at all developments. -8-

15 HPD disagreed with Recommendation 1, stating that "while a second count of required and accumulated reserves may be ideally desirable, it is not the most effective use of the very limited HPD property management resources." HPD believes that it "should be able to rely on the accuracy and veracity of professional CPAs." HPD indicated that it is currently reviewing auditing standards for Mitchell-Lama developments, and preparing written guidelines for CPAs. HPD did not explain how it was able to monitor compliance with reserve fund requirements for the ten developments whose financial statements did not contain reserve fund information. As our findings reveal, HPD cannot rely solely on Mitchell-Lama developments' financial statements. We believe that to properly carry out its oversight responsibility, HPD needs to maintain its own records for reserve reports and funding levels. HPD agreed with Recommendation 2, indicating that it will direct all accounting firms under retainer to Mitchell-Lama developments to include information regarding reserve funding levels in future annual statements. Regarding Recommendation 3, HPD acknowledged that "historically and on a continuing basis, there has been insufficient funding of Mitchell-Lama reserve accounts." HPD further indicated that in 1993 it began to "require routine funding for either immediate required capital repairs and/or funding of development reserve accounts as part of its rent/carrying charge increase process." HPD plans to continue requiring funding of reserves and/or capital repairs as additional rent/carrying charge increases are implemented. However, as a result of consistent and often vocal opposition to rent increases from Mitchell-Lama residents, HPD maintains that elected officials are often pulled into the process on behalf of their constituencies, making imposition of increases difficult, contentious, and protracted. Nevertheless, as indicated on the previous page, HPD said it has begun to monitor housing company compliance with reserve requirements. We believe HPD needs to ensure that all developments have adequate reserves. HPD disagreed with Recommendation 4, stating it has not required housing companies to undertake independent physical assessments for purposes of establishing capital need estimates because these assessments are an expense that many housing companies cannot readily absorb. HPD's response ignores our concern that 34 financial statements did not even disclose that independent physical assessments were not made. We believe that these assessments would provide a good mechanism for determining the true reserve funding needs of the developments. The housing companies' expenses for these assessments could be reduced if HPD lent its own expertise and also provided some central purchasing arrangements, which would likely result in lower costs. -9-

16 HPD agreed with Recommendation 5, indicating that it will review the methodology which DHCR and HUD use to establish reserve requirements for Mitchell-Lama developments under their jurisdictions, and consider whether its reserve formula should be revised. It should be noted that those methodologies include assessment of the physical condition of the properties. -10-

17 APPENDIX A METHODOLOGY To calculate the fiscal 1993 reserve requirement we used the HPD reserve funding formula in conjunction with answers submitted by each housing company in response to our questionnaire. The information furnished to us included the number of rental rooms in the development, the total annual rent and the number of air conditioners. Next, we used the CPA statements and other information provided by the CPAs. We calculated both the required reserves and the actual reserves. In neither calculation did we use that part of the formula relating to interest earned on investments (a minor part of the formula) since many development statements did not include the interest figure. In addition, we could not be sure that the statements that contained the interest figure accurately reflected the correct accumulated reserve account balance that should have been invested. -11-

18 APPENDIX B 1 of 2 SCHEDULE OF REQUIRED AND ALLOCATED RESERVE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 1993 DEVELOPMENT NAME BOROUGH RESERVES OVER/ REQUIRED ALLOCATED (UNDER)- RESERVES AND / OR ALLOCATION EXPENDED ADEE TOWERS Bronx $48,743 $6,943 ($41,800) AGUILAR GARDENS Queens 51,821 43,046 (8,775) BEDFORD GARDENS Brooklyn 433,539 0 (433,539) BIG SIX TOWERS Queens 225,511 1,224 (224,287) BRONXWOOD TOWER Bronx 25,905 0 (25,905) CANNON HEIGHTS Bronx 40,132 11,327 (28,805) CEDAR MANOR Queens 44,990 92,332 47,342 CHATTERTON TERRACE Bronx 30,281 4,644 (25,637) CLAYTON APARTMENTS Manhattan 37, ,762 63,558 CONTELLO TOWERS II Brooklyn 61,915 83,540 21,625 DAYTON BEACH PARK Queens 274, , ,717 DCA CENTRAL BROOKLYN Brooklyn 109,698 0 (109,698) DENNIS LANE APARTMENTS Bronx 59,930 12,757 (47,173) EVERGREEN GARDENS Bronx 144,175 0 (144,175) F.I.T. HOUSING Manhattan 65,729 0 (65,729) FRANKLIN PLAZA Manhattan 391,014 0 (391,014) GENERAL SEDGWICK Bronx 56,149 0 (56,149) HARGRAVE HOUSE Manhattan 38,232 48,598 10,366 HARWAY TERRACE Brooklyn 72, , ,083 HIGHLAWN TERRACE Brooklyn 20, (20,047) HUTCHINSON PARKWAY APTS. Bronx 29,350 40,184 10,834 INDEPENDENCE HOUSE Manhattan 37,997 17,920 (20,077) INDEPENDENCE PLAZA NORTH Manhattan 697, ,612 (5,703) KEW GARDENS HILLS Queens 526,591 0 (526,591) KINGS BAY I Brooklyn 87,224 3,548 (83,676) KINGS BAY II Brooklyn 62,586 27,075 (35,511) KNICKERBOCKER PLAZA Manhattan 151,066 77,480 (73,586) LaFONTAINE AVENUE Bronx 8,930 9, LINDEN PLAZA Brooklyn 344, ,138 (64,476) -12-

19 APPENDIX B 2 of 2 DEVELOPMENT NAME BOROUGH RESERVES OVER/ REQUIRED ALLOCATED (UNDER)- RESERVES AND / OR ALLOCATION EXPENDED LIND-RIC Bronx $33,555 $0 ($33,555) LINDSAY PARK Brooklyn 492, ,208 (291,594) LINDVILLE Bronx 32,487 10,251 (22,236) LUNA PARK Brooklyn 397,222 14,919 (382,303) MANHATTAN PLAZA Manhattan 626, ,375 (492,774) MASARYK TOWERS Manhattan 230,901 34,718 (196,183) MINS PLAZA Bronx 36,255 0 (36,255) MONTEFIORE I Bronx 55,884 41,112 (14,772) NORTHSIDE GARDENS Brooklyn 5,070 0 (5,070) NORTH WATERSIDE Manhattan 113,738 0 (113,738) OCEAN PARK Queens 138,615 74,264 (64,351) O.U.B. HOUSES Bronx 146,434 0 (146,434) PRATT TOWERS Brooklyn 76, ,407 24,060 RESIDENCE HALL aka MOUNT SINAI Manhattan 40,259 0 (40,259) RIVER PLAZA Bronx 72,745 0 (72,745) RIVER TERRACE Manhattan 93,965 31,788 (62,177) ROBERTO CLEMENTE PLAZA Brooklyn 312,570 0 (312,570) ROSEDALE GARDENS Bronx 80,285 0 (80,285) RUPPERT-YORKVILLE TOWERS Manhattan 450, ,336 (83,563) RYERSON TOWERS Brooklyn 68,005 0 (68,005) SAM BURT TOWERS Brooklyn 31,859 6,475 (25,384) ST. JAMES TOWERS Brooklyn 75, (75,432) TIBBETT TOWERS Bronx 35,962 1,029 (34,933) TILDEN TOWERS I Bronx 32,385 24,443 (7,942) TILDEN TOWERS II Bronx 53,240 0 (53,240) TRACEY TOWERS Bronx 531, ,897 43,143 VILLAGE VIEW HOUSING COMPANY Manhattan 245,671 (977) (246,648) WATERSIDE Manhattan 447,119 0 (447,119) YORK HILL Manhattan 46,626 1,023 (45,603) TOTALS $9,181,627 $3,978,902 ($5,202,725) -13-

20 SCHEDULE OF CUMULATIVE REQUIRED AND ALLOCATED RESERVE FUNDS AS OF JUNE 30, 1993 APPENDIX C 1 of 2 DEVELOPMENT NAME BOROUGH OVER/ REQUIRED ALLOCATEDR (UNDER)- RESERVES ESERVES ALLOCATION ADEE TOWERS Bronx $204,600 $55,930 ($148,670) AGUILAR GARDENS Queens 78, , ,388 BIG SIX TOWERS Queens 2,063,599 25,371 (2,038,228) CANNON HEIGHTS Bronx 81,972 0 (81,972) CEDAR MANOR Queens 520,890 0 (520,890) CHATTERTON TERRACE Bronx 328,324 0 (328,324) CLAYTON APARTMENTS Manhattan 308, ,264 (122,619) CONTELLO TOWERS II Brooklyn 120, ,592 23,914 DAYTON BEACH PARK Queens 1,013, ,262 (400,686) DCA CENTRAL BROOKLYN Brooklyn 1,180,996 0 (1,180,996) DENNIS LANE APARTMENTS Bronx 537,564 13,857 (523,707) FRANKLIN PLAZA Manhattan 430,162 0 (430,162) GENERAL SEDGWICK Bronx 56,149 0 (56,149) HARGRAVE HOUSE Manhattan (71,200) 8,292 79,492 HARWAY TERRACE Brooklyn 275,974 28,590 (247,384) HIGHLAWN TERRACE Brooklyn 8,424 3,331 (5,093) HUTCHINSON PARKWAY APARTMENTS Bronx 138, ,471 0 INDEPENDENCE HOUSE Manhattan 208,812 0 (208,812) INDEPENDENCE PLAZA NORTH Manhattan 1,275,480 1,275,480 0 KEW GARDENS HILLS Queens 2,049,000 0 (2,049,000) KINGS BAY I Brooklyn 459,304 18,728 (440,576) KINGS BAY II Brooklyn 328, ,235 0 KNICKERBOCKER PLAZA Manhattan 981, ,496 (334,977) LaFONTAINE AVENUE Bronx 27,003 27,003 0 LINDEN PLAZA Brooklyn 4,521,614 4,882, ,777 LIND-RIC Bronx 259,889 0 (259,889) LINDSAY PARK Brooklyn 590, ,259 (487,177) LINDVILLE Bronx 69,447 0 (69,447) LUNA PARK Brooklyn 2,185,881 0 (2,185,881) MANHATTAN PLAZA Manhattan 6,997,206 6,997,

21 APPENDIX C 2 of 2 OVER/ REQUIRED ALLOCATEDR DEVELOPMENT NAME BOROUGH (UNDER)- RESERVES ESERVES ALLOCATION MASARYK TOWERS Manhattan 1,407, ,436 (461,858) MONTEFIORE I Bronx 83, , ,629 NORTH WATERSIDE Manhattan 3,032 3,032 0 OCEAN PARK Queens 1,180, ,132 (900,517) PRATT TOWERS Brooklyn 758, ,266 (556,965) RIVER PLAZA Bronx 758,316 0 (758,316) RIVER TERRACE Manhattan 286,657 0 (286,657) ROSEDALE GARDENS Bronx 832,462 0 (832,462) RUPPERT-YORKVILLE TOWERS Manhattan 7,266,483 6,850,544 (415,939) RYERSON TOWERS Brooklyn 523,939 0 (523,939) SAM BURT TOWERS Brooklyn 347,480 64,080 (283,400) ST. JAMES TOWERS Brooklyn 491,952 10,106 (481,846) TIBBETT TOWERS Bronx 30,212 39,006 8,794 TRACEY TOWERS Bronx 1,745,507 0 (1,745,507) VILLAGE VIEW HOUSING COMPANY Manhattan 2,359,781 1,167,013 (1,192,768) WATERSIDE Manhattan 5,166,661 5,166,661 0 YORK HILL Manhattan 413,888 0 (413,888) SUBTOTALS $50,887,481 $30,757,774 ($20,129,707) BEDFORD GARDENS* Brooklyn $433,539 $0 ($433,539) BRONXWOOD TOWER* Bronx 25,905 0 (25,905) EVERGREEN GARDENS Bronx 144,175 0 (144,175) F.I.T. HOUSING* Manhattan 65,729 0 (65,729) MINS PLAZA* Bronx 36,255 0 (36,255) NORTHSIDE GARDENS* Brooklyn 5,070 0 (5,070) O.U.B. HOUSES* Bronx 146,434 0 (146,434) RESIDENCE HALL aka MOUNT SINAI* Manhattan 40,259 0 (40,259) ROBERTO CLEMENTE PLAZA* Brooklyn 312,570 0 (312,570) TILDEN TOWERS I* Bronx 32, , ,295 TILDEN TOWERS II* Bronx 53,240 0 (53,240) GRAND TOTALS $52,183,042 $30,989,454 ($21,193,588) * Required reserves based upon fiscal 1993 calculation only. No information regarding cumulative required reserves is available in annual reports. -15-

22 APPENDIX D MAJOR CONTRIBUTORS TO THIS REPORT Allen M. Vann, Director Stanley Evans, Audit Manager Stuart Dolgon Charles Johnson Arthur Lebowitz Michael Solomon -16-