Legal Aid's Chief Lawyer WarnsThat Thousands of Formerly Homeless Families and Individuals Are At Risk of Losing Their Homes and Flooding the City's Shelter System
WEDNESDAY, SEPTEMBER 14, 2011

Following a Manhattan State Supreme Court ruling late yesterday that the City is not required to continue paying Advantage rent subsidies to some 16,000 formerly homeless families and individuals, Steven Banks, Attorney-in-Chief of The Legal Aid Society, cautioned that "by winning, the City loses" because "thousands of formerly homeless families and individuals are at risk of losing their homes and flooding the shelter system."

In interviews with the Wall Street Journal, Associated Press, Reuters, and the New York Law Journal, Banks warned that the City "will have to pay far more to shelter these families and individuals than by continuing to make the rental payments."

Banks also pointed out that, pending a prior appeal, there is an Appellate Division, First Department order in place stopping the City from terminating rental assistance for these thousands of families and individuals until their Advantage rent subsidy agreements expire. Therefore the subsidies will continue to be paid unless the City is able to obtain a further ruling vacating that appellate order. Banks said that an appeal from yesterday's ruling would also be forthcoming.

In the litigation, Weil, Gotshal & Manges LLP has served as pro bono co-counsel with the Society.



The Wall Street Journal
City Wins on Subsidies
Judge Rules That New York Can Discontinue Program for Formerly Homeless
September 14, 2011
By Michael 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



New York City may terminate homeless program -court
9/13/2011
NEW YORK, Sept 13 (Reuters)

In a blow to homeless people in New York, a Manhattan judge on Tuesday held that the city could terminate a program that offered rent subsidies to thousands of formerly homeless residents.

In a 21-page ruling, Supreme Court Justice Judith Gische ruled that the city and the Department of Homeless Services did not enter into binding contracts with recipients of the Advantage Program, which provides up to two years of rent subsidies to help New Yorkers transition from temporary emergency shelters.

"[N]o matter how laudable its goals, [the Advantage Program ] is nothing more than a social benefit program, which defendants had the right to terminate, based upon the lack of funding available for its continuation," Gische wrote.

Earlier this year, the city announced that budget reductions would make it impossible to continue Advantage, which began in 2007.

On March 28, the Legal Aid Society sued on behalf of existing Advantage recipients to block the city from cutting the program, as it planned to do April 1. In June, the Appellate Division, First Department, issued an order requiring the city to continue the payments to existing recipients.

Meanwhile, in a five-day trial before Justice Gische, the city argued that it had no legal obligation to make the payments.

NO INTENT TO BE CONTRACTUALLY BOUND

Justice Gische agreed.

"The defendants did not manifest an intent to be contractually bound to provide the benefits associated with the Advantage program," she wrote.But the First Department order means that the subsidies will continue unless the city moves to vacate that order.

Steve Banks, attorney-in-chief for Legal Aid, said in an interview that an appeal would be forthcoming from Legal Aid and Weil, Gotshal & Manges, which represented the recipients pro bono.

"This certainly seems like a case in which the city loses when it wins, since it will have to pay far more to shelter these families and individuals than by continuing to make the rental payments," Banks said.

"We believe that the judge made the correct decision based upon the facts and the law," said Corporation Counsel Michael Cardozo in a statement. "The Advantage Program is a social program and not a series of contracts entered into by the City."

The case is Jasmine Zheng et al v. The City of New York et al, New York Supreme Court, No. 400806-2011.

For Jasmine Zheng et al: Steven Banks of The Legal Aid Society and Konrad Cailteux, Isabella Lacayo and Debra Dandeneau of Weil, Gotshal & Manges.

For New York City et al: Eric Rundbaken, David Cooperstein and Abigail Goldenberg of the New York City Law Department and Michele Ovesey of the Department of Homeless Services.



Associated Press
September 13, 2011 9:11 PM
Judge: NYC OK to end rent subsidy for ex-homeless
NEW YORK

The city can stop paying rent subsidies for more than 16,000 formerly homeless families after losing state backing for the initiative, a judge ruled Tuesday in a case that advocates have said could make thousands of people homeless again.

While the Advantage program has valuable aims, the city was within its rights to cancel it, Manhattan state Supreme Court Justice Judith J. Gische said.

New York City officials "have no ongoing obligation, contractual or otherwise, to continue the Advantage program," she wrote.

An appeals court had ordered the city to keep paying the assistance while the legal fight played out. Steven Banks, chief attorney for the Legal Aid Society, which sued the city on behalf of Advantage recipients, noted that the order still stands, at least for now. The city could take further legal action to get the order voided.

The city's chief lawyer, Michael A. Cardozo, and City Homeless Services Commissioner Seth Diamond praised Gische's decision. It came after a five-day civil trial this summer.

"We will continue to move forward in supporting homeless families in their effort to gain employment and move out of shelter," Diamond said in a statement.

The four-year-old program was designed to move families out of shelters and into permanent housing. It provides rent subsidies for up to two years to homeless people who have secured jobs but can't pay the rent from their earnings alone. It was projected to cost $140 million this fiscal year.

Advocates for the homeless have long expressed concern also about whether the program puts people in apartments they can't afford long-term.

The city told the families in March the subsidies were stopping because of state budget cuts. City officials said they had no choice, but some critics accused the city of using the program as a political tool in a standoff with state lawmakers over spending.

City officials forecast then that without the program, the city's homeless family population would increase by 51 percent and the city would have to build an additional 70 shelters.

Banks said in a March court filing that ending the program would put its recipients "at imminent risk of eviction proceedings and homelessness."

"By winning, the city loses, since now thousands of formerly homeless families and individuals are at risk of losing their homes and flooding the shelter system," he said by telephone Tuesday evening.

Legal Aid argued the program amounted to a contract. But the judge said it didn't carry such guarantees.

"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," she wrote.



The New York Law Journal
City Wins Bid to End Rental Assistance Program
By Mark Hamblett
09-14-2011

Thousands of formerly homeless families and individuals do not have the right to force New York City to fund a transitional rental assistance program, Manhattan Supreme Court Justice Judith J. Gische (See Profile) ruled yesterday. She found that the city had the power to end funding for the Advantage Program because of budget constraints. The city announced on April 1 that it would end the program, which gave formerly homeless people who lived in emergency shelters a chance to get back on their feet by paying part of their rent for up to two years. The Legal Aid Society filed a class action on behalf of 16,255 formerly homeless individuals, Zheng v. The City of New York, 400806/11, in March and won a temporary restraining order from Justice Gische (NYLJ, March 30).

An expedited trial was held on five days in June and July and the parties submitted briefs with proposed findings of fact to the judge in August. Yesterday, Justice Gische held "that the Advantage program, no matter how laudable its goals, is nothing more than a social benefit program, which defendants had the right to terminate, based upon the lack of funding available for its continuation." The judge said the New York City Department of Homeless Services and the New York City Department of Human Resources Administration "have no ongoing obligation, contractual or otherwise" to continue the program.

"We believe that the judge made the correct decision based upon the facts and the law. The Advantage program was a social program and not a series of contracts entered into by the City," Corporation Counsel Michael A. Cardozo said in a statement. Steven Banks of the Legal Aid Society said there was still an appellate injunction in place that would prevent thousands from being evicted. The injunction was ordered by the Appellate Division, First Department, pending appeal of Justice Gische's denial of a preliminary injunction in May.



Road to City Hall
NY1 (IND) New York
September 15th, 2011 7:00 – 8:00 PM

Errol Louis, Host: Finally in the news tonight, after four years, the Bloomberg administration terminated a housing subsidy program for the homeless because of state cuts. Homeless advocates filed suit, but this week the administration had a victory in court. Our Courtney Gross explains.

Susan Shafer, Housing Voucher Recipient: I don’t want to go back to the shelter, and I don’t want to live in the streets, and I really don’t know what I’m going to do.

Courtney Gross, Reporter: Susan Shafer had been one of the 25,000 homeless individuals and families to receive a rental subsidy from the city for housing over the last four years. The program, known as Advantage, came with a catch; it was time-limited a maximum of two years, and the adult had to work or get job training. But thanks to state cuts, the program was killed in April. The city said it couldn’t afford its $140 million price tag on its own.

Seth Diamond, Homeless Services Commissioner: That left the city in the position that it couldn’t continue to support and fund a very valuable program that’s helped over 25,000 households move out of shelter.

Courtney Gross: In response, Legal Aid and homeless advocates filed suit to force the city to keep writing checks, but this week they lost.

Steven Banks, The Legal Aid Society: By winning, they’re actually losing, because to have thousands of families and individuals lose their housing, end up back in the shelter system at great public expense certainly isn’t any kind of win for anybody.

Courtney Gross: The program had been a signature part of the Bloomberg administration’s homelessness policies. Currently, 15,000 families receive the subsidy. This week, there were more than 38,000 in city shelters.

For former homeless individuals and families, the end of the Advantage program brings fears they’ll end up back at one of the city’s 200 shelters. They say their lifeline’s been stripped away. Susan Shafer: I was supposed to pay a third of the rent. I can afford my third; I just need Bloomberg to help me with the rest.

Courtney Gross: Advocates question whether Advantage prevented people from going back into shelters. At the same time, they don’t want to see the program go.

Patrick Markee, Coalition for the Homeless: They’ve promised these families that they would give them a one or two year lifeline, and those families deserve that lifeline.

Courtney Gross: For now, the program is officially over. That, of course, could change as the case winds its way through the appeals process. Courtney Gross, Inside City Hall.



New York Daily News
September 15, 2011
JUDGE OKS CITY'S AXING OF RENT AID
By Tina Moore

THOUSANDS OF formerly homeless families could wind up back in shelters now that the city has a court's permission to quit paying their rent.

Manhattan Supreme Court Justice Judith Gische ruled Tuesday that the city could end the Advantage rental subsidy program for 12,000 families and individuals.

The four-year-old program was designed to move families out of shelters and into permanent housing. People who had jobs but couldn't afford rent got the subsidy for as long as two years.

Gische called the program "nothing more than a social benefit program" that the city was under "no obligation, contractual or otherwise" to continue.

The city tried to kill Advantage in March, citing state cuts, but the Legal Aid Society sued.

An appeals court ordered the city to keep paying rent during the case, and that will continue for now, chief Legal Aid lawyer Steven Banks said.

The city would have to persuade the appeals court to vacate the order, he said, vowing to fight such a move.

"It will cost far more to provide shelter than to continue the rental payments," Banks said.

The city praised Gische's ruling.

"The Advantage program was a social program and not a series of contracts entered into by the city," the city's chief lawyer, Michael Cardozo, said in a statement.