NEW YORK — An extensive inquiry into New York City’s homeless shelter system, which has a budget of $4 billion, has revealed significant issues related to poor management, conflicts of interest, and favoritism.
The investigation, which began in 2021 prior to an influx of tens of thousands of migrants that further strained the shelter resources, was released on Thursday by the city’s Department of Investigation. The findings arose from an examination of numerous nonprofit groups contracted by the city to offer shelter services to homeless individuals and families.
The 100-page report details alarming practices such as the employment of immediate relatives of upper management and board members at certain shelters, in apparent violation of city contractual obligations. Investigators also noted instances where executives from city-funded shelters held positions in security firms engaged to provide services at the same facilities.
Additionally, some shelter operators did not adhere to competitive bidding protocols when acquiring goods and services, leading to contracts worth millions being awarded to companies linked to the landlords of the properties instead of being opened to competitive bids.
The investigation highlighted that certain nonprofit executives, whose organizations largely rely on taxpayer funding, earn salaries exceeding $700,000 annually, with a noted absence of regulations governing their compensation.
Department of Investigation Commissioner Jocelyn Strauber emphasized the need for preventive measures to safeguard taxpayer investments in nonprofit agencies funded by the city. “City-funded nonprofit service providers pose unique compliance and governance risks, and comprehensive City oversight is the best way to stop corruption, fraud, and waste before it starts,” she stated.
Neha Sharma, a representative of the city’s Department of Social Services, which oversees homeless services, affirmed that the department takes non-compliance seriously. She noted that the DSS has discontinued its relationship with several providers mentioned in the report and has strengthened its review policies and auditing practices.
Sharma clarified that the findings of the report do not accurately represent current practices in contracting and oversight, as the investigation was initiated before Mayor Eric Adams, a Democrat, assumed office in 2022.
Historically, New York City has provided shelter for more homeless individuals than any other city in the United States, a situation stemming from a court ruling in 1981 that mandates the city to offer shelter to anyone requesting it.
According to the findings, the nightly occupancy of city-funded shelters varied between 45,000 and 55,000 from 2020 until mid-2022, and has surged to over 87,000 due to the substantial influx of migrants over the past two years.
In the fiscal year 2024, New York City allocated $4 billion for homeless shelter services, a notable increase from $2.7 billion in 2022, revealing the escalating costs associated with addressing homelessness in the city.