Advantage Rent Case To Be Decided By An Appellate Court; Advantage Rent Not Currently Being Paid

After oral argument on February 9, the Appellate Division, First Department is considering The Legal Aid Society's appeal on behalf of approximately 8,000 formerly homeless families and individuals who the City relocated to apartments with guaranteed Advantage rent subsidies but then proposed to terminate the subsidies. On this appeal, the Society is seeking a ruling requiring the Department of Homeless Services to continue the payment of Advantage rent subsidies to Advantage Landlords on behalf of the Advantage Tenants until their Advantage agreements end two years after they were executed. Pursuant to a First Department Order, the Department of Homeless Services had paid the Advantage rent supplements through January 31, 2012. Last week, an appellate panel declined to require the Department to continue the payments in February for the remaining families and individuals while the appeal is being decided.

Steven Banks, the Attorney-in-Chief of The Legal Aid Society, told the New York Law Journal that he was hopeful the First Department would grant Legal Aid's arguments on the merits in time to prevent the eviction of some 8,000 formerly homeless Advantage tenants who are at risk of imminent eviction proceedings and repeat homelessness. Along with the Society, Weil Gotschal & Manges LLP is pro bono co-counsel for the certified class of Advantage families and individuals.

The New York Times
Rare Sympathy for the Landlord
February 25, 2012
By Ginia Bellafante

On Thursday morning, Glenn Lawrence, a driver for Budget rental cars, walked from his apartment in the Castle Hill section of the Bronx to a nearby outpost of Catholic Charities to learn how he might avoid the pain and financial burden of relocating. Chiefly, he hoped not to relocate back into the shelter system in which he’d spent several degrading months. At the shelter where he had lived in Harlem, he was not allowed to bring in food, he told me.

Mr. Lawrence currently works three days a week making $9.67 an hour, which puts him in the range of making $1,000 a month; the Budget job is one he held during the entire time he was homeless. He has been having a difficult time finding additional work to maintain a livable income. The rent on his apartment in a two-story house is $963 a month.

Affluent New Yorkers can be heard on any given Sunday culling the real-estate Web sites, lamenting the difficulties of finding two-bedroom apartments in great neighborhoods for under $1 million. Whatever the lunacy of a market that in many parts of the city puts a buyer of a $900,000 home firmly in the middle class, there is a greater insidiousness to the real-estate realities in some of the most depressed quarters of New York. For what it costs Mr. Lawrence to live in a one bedroom in one of the poorest parts of the city, he could rent an apartment of comparable size in sunny Pasadena.

Until this month, a portion of Mr. Lawrence’s rent was paid for by the Advantage program, a controversial initiative devised to transition people out of homelessness. It offered subsidies for up to two years to help people in shelters afford their own apartments, provided they worked or took part in job training. The state cut financing for the program last year, and the city said it would discontinue it. The Legal Aid Society sued the city and, until this month, the Bloomberg administration was financing the subsidies. Then, on Tuesday, an appeals court ruled that the city was no longer required to make rental payments.

On Thursday, Mr. Lawrence was attending one of the dozens of seminars the Department of Homeless Services is conducting, through its Homebase program, to try to minimize the damage resulting from Advantage’s dissolution. Jaime Feinstein, the social worker leading the discussion, explained to tenants that in many cases, landlords, struggling financially themselves, were not the enemy; in many cases, she could negotiate with landlords to lower rents. Ms. Feinstein, who works for Catholic Charities, which is contracted to run Homebase in the South Bronx, makes it her business to ingratiate herself with landlords in the area. She calls them on their birthdays.

Mr. Lawrence, in fact, had no ill will toward the man who owned the house where he has been a tenant, describing him in the meeting as “a beautiful person.” His issue was with the broader universe of unaffordable housing, which in many cases forces property owners to charge high rents to help meet their burdensome mortgage payments on exorbitantly priced real estate.

The crisis around Advantage, which threatens to displace thousands of once-homeless families, is at the same time jeopardizing the livelihoods of thousands of landlords, many of them small-property owners now put in a very precarious position. Having been told they would receive two years’ worth of rent, they entered into good-faith relationships with the city, only now to be told they wouldn’t get the money after all. Even the Legal Aid Society, not generally a friend of business, has been drawn to their woes, said Steven Banks, the organization’s lead lawyer.

So rarely a figure of sympathy in the lore of New York, the landlord has emerged as another victim of the Bloomberg administration’s seemingly ad hoc approach to homeless policy. I offer by way of example Linda Sharp, who had relied on the income generated from a multiunit building she bought in Bushwick, Brooklyn, during the 1990s to support her in her old age. Two-thirds of Ms. Sharp’s current tenants came to her through Advantage.

One of them, James Walker, who served in the reserves during the Vietnam War, is disabled, having had four strokes. Ms. Sharp has picked him up from the hospital.

When he moved in, after two years in a shelter in Queens, with only $300 to buy everything for his apartment, Ms. Sharp called the corporate offices of Sleepy’s and persuaded the company to deliver a mattress at no cost the same day. Save for a bed, a sofa and a picture of the daughter Mr. Walker lost custody of years ago, when she was 6, the apartment is unfurnished.

Ms. Sharp has already lowered the rent, to $750 a month, and has no plans to evict Mr. Walker. But at the same time, she is facing the possibility of foreclosure, and she has little interest in participating in Bushwick’s gentrification.

“People have told me I could rent to hipsters,” she said. “But you know, I don’t really want to rent to hipsters.”

Not long after I met Ms. Sharp, I spoke with Ferdo Shkreli, an Albanian immigrant who owns a number of buildings in the Bronx. He has had to evict some of his Advantage tenants, but others remain.

“You get very emotionally involved with some people,” he said. He and his brother, for years, have together paid rent for one of the tenants, a veteran. “There’s this myth in the air in New York that all landlords are millionaires,” he said. “We’re not.”

The New York Law Journal
Bid to Stop City From Halting Rent Subsidies Is Rejected
By Jeff Storey

A state appeals court has declined to grant a stay that would have prevented New York City from cutting off rental subsidies to about 8,000 formerly homeless families while it considers an appeal filed by the tenants. Steven Banks, attorney-in-chief of the Legal Aid Society, which represents the tenants, said that participants in the Advantage program received their last checks in January and now stand in peril of imminent eviction.

Manhattan Justice Judith Gische (See Profile) decided last year that the city was within its rights to end the Advantage program after federal and state funding expired. On Feb. 16, a panel of the Appellate Division, First Department, heard oral arguments in a challenge by Legal Aid to that decision. On the same day, however, the court denied a request in Zheng v. City of New York, M-595, for a preliminary appellate injunction that would have prevented the city from cutting off the funds pending the court's decision. Joining the 4-1 majority to deny the stay were Justices Luis A. Gonzalez (See Profile), John W. Sweeny Jr. (See Profile), Dianne T. Renwick (See Profile) and Rosalyn H. Richter (See Profile). Justice Karla Moskowitz (See Profile) dissented. Mr. Banks said he was hopeful the court would grant Legal Aid's arguments on the merits in time to prevent the eviction of its clients. The case originally involved 15,000 families, but the two-year grants by the city for almost half have expired in the interim.