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City Wins on Subsidies: Judge Rules That New York Can Discontinue Program for Formerly Homeless

Ohanian Comment: "Wins" has a bizarre, perverse meaning in this context, where there are thousands of losers. And in the end, the millions who live and work in the city are losers when that city turns its back on people in desperate need of a helping hand.

Note the fact that the cost of sheltering the thousands of families and individuals who can now lose their homes is more than the cost of continuing the rental assistance. Also note the projected 51% increase of children living in shelters. Of course the mayor will blame teachers when these children encounter difficulties in school.

By Michael Howard Saul

A state judge ruled on Tuesday that Mayor Michael Bloomberg's administration can terminate a rent-subsidy program for formerly homeless families and individuals, a move that could potentially send thousands of people flocking back into New York City's shelter system.

When the city lost state funding for the program, called Advantage, the Department of Homeless Services notified participants and landlords that the administration would be discontinuing the subsidies, effective April 1.

In response, the Legal Aid Society, a nonprofit, helped program participants file a class-action lawsuit challenging the administration's plans to end the program. An injunction prevented the city from stopping the subsidy payments while the lawsuit was pending, and that injunction remains in place.

In a 21-page decision, Judge Judith Gische wrote, "The court holds that the Advantage program, no matter how laudable its goals, is nothing more than a social benefit program, which [the city] had the right to terminate, based upon the lack of funding available for its continuation."

The Bloomberg administration has "no ongoing obligation, contractual or otherwise," to continue the program, the judge ruled.

Seth Diamond, commissioner of the Department of Homeless Services, said the lawsuit forced the city to spend nearly $80 million for continuing the program after the state eliminated funding. He called the lawsuit "unfortunate" and "misguided."

"We are gratified that Judge Gische has agreed that Legal Aid's attempt to require city taxpayers to pay the full cost of Advantage was misguided," Mr. Diamond said. "While the state's decision to eliminate Advantage was the wrong policy decision, we will continue to move forward in supporting homeless families in their effort to gain employment and move out of shelter."

Steve Banks, the attorney-in-chief of the Legal Aid Society, who has represented homeless New Yorkers in litigation establishing the right to shelter since the early 1980s, said, "This seems like one of the cases where the city loses by winning since the cost of sheltering the thousands of families and individuals who can now lose their homes is more than the cost of continuing the rental assistance."

Mr. Banks said these formally homeless families and individuals have "no way to pay their rent absent these subsidies so they'll certainly be evicted and end back in the shelter system." It cost roughly $1,000 a month to subsidize their rent, and about $3,000 a month to house a family in the shelter system, Mr. Banks said. "The math doesn't add up," he said.

In an interview, Mr. Diamond said the city hopes to implement the judge's decision as soon as possible. He said the city will immediately ask the appellate division to lift an injunction that required the administration to continue providing the subsidies; Mr. Banks said he expected the Legal Aid Society to challenge that.

There are currently 12,000 households, with a total of 37,000 people, still receiving rent subsidies as part of the program.

The purpose of the program is to help transition families from the shelter system to permanent housing; the city provides rent subsidies for two years, and then participants are on their own to pay the rent.

In March, Mr. Diamond predicted the loss in state aid would cause a 51% increase in the number of families with children in the city's shelter system by June 2012. The loss in aid would force the city to build 70 new shelters in neighborhoods citywide, he said at the time.

On Tuesday night, Mr. Diamond declined to estimate how many families would end up back in the shelter system if the city stops providing the subsidies.

He said he thought the numbers would be significantly lower than what the administration initially anticipated, in part because participants have known now for months that the program's future was in jeopardy.

Public Advocate Bill de Blasio said he's concerned about the potential influx of families into the shelter system.

"For the first time in many years, we're a city without a plan to move people from homeless shelters into their own housing—and that is just not sustainable," he said

Write to Michael Howard Saul at michael.saul@wsj.com

— Michael Howard Saul
Wall Street Journal





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