Top executives of taxpayer-funded groups running the city’s homeless shelters gave themselves massive salaries — and some of the nonprofits still haven’t reported their pay, a shocking new report revealed.
City Hall is scrambling to make changes to its provider compliance processes after an embarrassing report from the Department of Investigations exposed inflated salaries, nepotism and a lack of competitive bidding in the city’s shelter contracting process.
At least 13 of DHS’s 87 contracted shelter providers still have not disclosed their executive compensation levels to the Department of Homeless Services — a violation of their agreements.
The damning report caused City Council Finance Chair Justin Brannan to remark that “blank checks to outside vendors and no-bid emergency contracts seem to flow like a freshwater stream throughout City Hall.”
Brannan made his statement at a City Council joint oversight hearing Tuesday where council members grilled the Department of Social Services Commissioner Molly Wasow Park over the findings of the October report, which recommends the agency install a chief compliance officer, more closely monitor shelter expenditures and set a cap for city-funded executive compensation.
“The administration has the duty and responsibility to manage city funds with prudence to ensure city funds, authorized for public services, are in fact serving the public — not friends, family or private interests,” Brannan said.
The DOI identified multiple shelter executives who paid themselves big bucks after securing city-funded contracts.
In one instance, the chief executive of a shelter provider paid himself more than $1 million in one year. That provider, CORE, was almost entirely funded by the city, according to the report. Park said DHS no longer works with CORE.
The president and CEO of provider Camba received more than $700,000 across multiple years, according to the report.
The president and chief executive officer of Acacia Network Housing made over $916,000 in 2021.
Some of the nonprofits enhanced senior executives’ pay by contracting to other companies they own.
For example, nonprofit shelter provider SEBCO Development Inc. used city funds to pay for more than $11.6 million in security services from a security company owned by SEBCO, according to the report.
Senior executives at SEBCO then paid themselves nearly $400,000 in salaries from the security company, according to the report.
“The owners of the company were listed publicly on the website of both the nonprofit and the subcontractor for the security company,” Council member Julie Won said.
“There are systems that are automated to scrub the web or scrape it for you so that you don’t run into problems like this,” Won said.
The report also said SEBCO hired four companies affiliated with the husband of a top company executive to provide extermination, maintenance and cleaning services at the DHS-funded shelters.
Charles Diamond, special counsel at the Mayor’s office of Contract Services, testified at the hearing that he is working on new rules around third-party contracts that will be out in 2025.
“These have been long term processes that are coming to a conclusion,” Diamond said of the city’s effort to review its contracting processes.
The report also recommends that DHS “conduct more robust reviews of expenses” of providers, which Park pushed back on.
“Organizations need some level of flexibility,” Park said.
“If we are signing off on every little dollar that a nonprofit spends, then we are actually harming their ability to operate,” Park said. “We are perpetually seeking that balance.”
Park also said DSS follows the same nepotism policy as the rest of the city and insisted the agency has been improving in compliance.
“We’ve strengthened our disclosures across the board,” Park said.
When Brannan asked Park about recent corruption allegations at City Hall, Park insisted that the DSS contracting process has remained independent.
“DSS follows procurement policies very closely,” Park said. “We stick to the letter of those rules and City Hall personnel are not directly involved in any of our contracting actions.”
