Comptroller John Liu is keeping up the pressure on Mayor Bloomberg over the mayor’s befuddling defense of a homeless shelter operator that has continually failed inspections. Liu says the city needs to “discontinue its use of shelter provider Aguila Inc. in light of repeated failures to account for millions of dollars spent and the continued placement of people in shelters that are unsafe or unclean.”

A new audit of Aguila, which runs the controversial shelter on 95th street near Riverside Drive and other local shelters, showed that the city had taken too little action to recoup payments that Liu says were “improper or insufficiently supported.”

Liu says that more than 80% of the units that were subject to spot inspections in these shelters have failed, but the Department of Homeless Services hasn’t followed up.  And the city has gone very easy on the shelter operators, even though they haven’t kept up with bills: “The audit also found that, as of June 2013, Aguila facilities owed the City $605,439 in unpaid water and sewer charges.”

Meanwhile, Aguila, run by former DHS commissioner Robert Hess, has pulled in $57.1 million from the city in 2013. They’re charging the city about $3,700 per small bathroom-less kitchen-less unit, offering Aguila and their landlord a strong incentive to push out the working poor who live in SRO rooms in the buildings and tend to pay less than $1,000 (The Times has found that landlord Alan Lapes has been doing his best to get those tenants out).

Local group Neighborhood in the Nineties is suing the city over the shelter, claiming it violates the city charter and is a neighborhood nuisance. Their first court date is Wednesday November 6th at 9:30 AM in New York State Supreme Court, 80 Centre Street, Room 289. “Neighborhood In The Nineties (N90s) asks all of our neighbors to show up in a public display of support as our legal team challenges the 9.5-year contract proposed by the City with Aguila, a shelter operator with a troubled record, for the West 95th Street ‘Freedom House’ shelter.”

The city responded to our request for comment about the audit with the statement below:

“The City’s Department of Homeless Services provides shelter, critical support and job placement services for members of the New York City community who most need them. The City is, unfortunately, unable to comment on the specifics of the Aguila contracts since, as the Comptroller knows, we are suing him but we would caution anyone against placing confidence in this Comptroller when it comes to questions of numbers.”

Here’s Liu’s letter to Bloomberg, and the audit. His statement is below:

Comptroller John C. Liu called on the Department of Homeless Services (DHS) to discontinue its use of shelter provider Aguila Inc. in light of repeated failures to account for millions of dollars spent and the continued placement of people in shelters that are unsafe or unclean. He also called on City Hall to drop its lawsuit against the Comptroller’s office with regards to proposed contracts with Aguila.

“Despite their claims to the contrary, Aguila’s appalling record has not improved and DHS continues to turn a blind eye. At this point, DHS should just dump Aguila as a shelter operator, and City Hall should direct its resources towards fixing DHS rather than litigating against my office,” Comptroller Liu said. “Continued dysfunction is a grave disservice to the homeless in need as well as communities whose concerns and input have been bypassed.”

A new audit underscores a fraught history with DHS and Aguila. In a November 2011 audit, Liu called on DHS to recoup $1.4 million from Aguila and examine another $9 million in bills to see if taxpayers were entitled to recover more.

Today’s audit found that DHS has recouped only $558,412, and didn’t even investigate more than half of the total $10.4 million identified by the earlier audit as improper or insufficiently supported payments.

Additionally, the audit found the following deficiencies with DHS operations:

·         The agency continued to do business without written agreements, in violation of the City Charter;

·         DHS did not adequately explain how rates the City paid for different shelters were set;

·         DHS did not appropriately follow up after more than 80 percent of units subject to spot inspections failed.

The audit also found that, as of June 2013, Aguila facilities owed the City $605,439 in unpaid water and sewer charges.

In light of the multitude of problems, rather than reining in Aguila, DHS rewarded it instead. DHS payments for Aguila-operated shelters surged from $46.3 million in Fiscal Year 2011 to $57.1 million in Fiscal Year 2013.

The new audit made 18 new recommendations. They include:

·         Periodically review Aguila per diem rates, allocation plans, and budget line items to ensure accuracy, reasonableness, and appropriateness, and ensure items are adequately supported.

·         Further investigate and recoup the balance of funds as identified in the previous audit.

·         Enter into written contracts with Aguila for directly-operated facilities that, at minimum, specify or restrict how funds may be expended.

·         Immediately eliminate the practice of placing clients in facilities with hazardous and unsanitary conditions.

·         Conduct surprise inspections and vary the inspectors.

·         Ensure that all Aguila facilities pay their City fines and water and sewer charges.

Download Letter to City Hall

Background:

November 2011, Liu audit calls on DHS to recoup money from Aguila: https://comptroller.nyc.gov/wp-content/uploads/documents/FK10_130A.pdf

May 2013, Liu proposes vouchers to help homeless families: https://comptroller.nyc.gov/wp-content/uploads/2013/07/20130509_NYC_RentalSubsidyProgram_v12.pdf

May 2013, Liu issues report on how Mayor Bloomberg’s shelter policies are failing communities and the homeless: https://comptroller.nyc.gov/wp-content/uploads/documents/20130509_NYC_ShelterSiteReport_v24_May.pdf

June 2013, the State Supreme Court, Bronx County rules in favor of the Comptroller’s office in a suit challenging the Mayor’s practice of establishing shelters and paying for those services without going through required public procurement processes. Liu statement: https://comptroller.nyc.gov/newsroom/liu-on-westchester-square-shelter-suit/

July 2013, Liu rejects Aguila shelter contracts in the South Bronx and West 95th Street in Manhattan: https://comptroller.nyc.gov/newsroom/liu-rejects-aguila-shelter-contracts/