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The city’s fiscal watchdog has rejected a $12 million contract with the Housing Authority’s independent monitor — demanding City Hall provide a better explanation for what all that taxpayer money is funding.
Comptroller Scott Stringer also cited NYCHA monitor Bart Schwartz’s firm’s past clash over billing with the Securities & Exchange Commission as well as his failure to disclose his ties to a controversial activist — both revealed last year by THE CITY.
Stringer sent the rejection letter to the Department of Law on Friday, seeking more information on its contract with Schwartz and his company, Guidepost Solutions. To date, the firm already has billed the city for $7.5 million.
The comptroller demanded that the Law Department “describe what safeguards you will put in place to ensure that the city does not become exposed to substantial cost overruns.”
Schwartz and his firm were appointed to oversee the public housing agency as part of a Jan. 31, 2019, agreement between Mayor Bill de Blasio, NYCHA, the U.S. Department of Housing & Urban Development (HUD) and Manhattan federal prosecutors. The fed found NYCHA managers had covered up decrepit conditions in many of its 174,000 apartments.
Schwartz is a former federal prosecutor who has been hired as an independent overseer in multiple cases over the years. As monitor, he’s now working with NYCHA to reorganize its management, while his team is vetting the authority’s troubled efforts to combat lead paint, toxic mold, broken down elevators and rat infestations.
Past Overcharging Alleged
The rejection letter cited a February article by THE CITY detailing Schwartz and Guidepost’s prior work for the SEC, which questioned what it deemed to be excessive billing by the firm.
In response to Stringer’s questions, the Law Department noted that “according to news reports on the SEC issue and as reported by Guidepost, the Guidepost issues in question were not related to fraud or misconduct, but rather were related to the high cost of services.”
The Law Department said that Schwartz was selected by NYCHA and City Hall, which “determined that Guidepost was a responsible vendor, regardless of the SEC issue.”
Stringer’s letter also referenced a vendor check compiled by the city Department of Investigation that noted Guidepost had failed to mention several connections to other entities — including Schwartz’s longtime affiliation with controversial former New Alliance Party leader Lenora Fulani.
Schwartz’s post as a board member of Fulani’s group, The All Stars Project, was first reported by THE CITY in February. That connection was not mentioned on Guidepost’s filings with the city Department of Investigation, Stringer noted.
There were several other omissions in the DOI vendor questionnaire — including Guidepost failing to reveal two of its subsidiaries or that it had hired former NYCHA Chief Compliance Officer Edna Wells Handy as a consultant after she left her post at the authority. The information was left out “inadvertently,” Guidepost said.
Initial $20 Million Ask
THE CITY reported in July that Schwartz and Guidepost had initially proposed to HUD a budget estimate of $20 million a year. That proposal was deemed too vague and sent back.
After months of negotiations with City Hall, the Law Department in November signed off on a deal built on an estimated first-year budget of up to $12 million. That agreement stated Schwartz would be paid $600 an hour — which he called a discounted rate.
In his rejection letter, Stringer requested City Hall provide copies of all bills submitted so far — representing $7.5 million within the first six months.
He also noted that the final budget for the monitor’s first year is still being negotiated, adding: “Please clarify why the first year budget is still an open item if it was agreed upon in February 2019.”
The mayor’s office is still discussing its next steps.
“While prior administrations turned their backs on residents, we rolled up our sleeves and made an historic investment to turn around NYCHA with our federal partners,” de Blasio spokesperson Olivia Lapeyrolerie said late Monday. “We will continue to ensure taxpayer dollars are being spent wisely and in service of residents.”
Schwartz’s office declined to comment on the comptroller’s rejection letter. NYCHA did not immediately respond to requests for comment.
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