New York, NY —

City Comptroller John Liu says the city's Department of Homeless Services continues to make handshake agreements with hotel and apartment building owners to provide emergency shelter, despite a promise years ago to formalize those arrangements.

An audit found that in 2008, Homeless Services paid out $153 million to more than 100 shelter providers without contracts. The comptroller's office says that's 50 percent of what was spent on sheltering families for the year. The city disputes that.

The audit says these handshake agreements lead to wasteful spending at a time of large budget deficits. The city says the agreements are necessary when emergency shelter beds are needed quickly. But Liu disagrees. "We're not seeing situations where all of a sudden a thousand more people need beds by tomorrow," he says.

Liu says the city can do a better job of projecting its shelter needs.

The audit also found that, in some cases, shelters were unsanitary and in poor condition. Homeless Services maintains that it takes six to nine months to enter into a contractual agreement, too long to wait when beds are needed quickly. In 2003, a WNYC investigation exposed these handshake deals. Mayor Bloomberg promised then to put an end to the problem.

The city says progress has been made and about 70 percent of all family shelter units are under contract.