The Department of Homeless Services is quietly finalizing more than $98 million in contracts that would turn five apartment buildings currently part of the notoriously mismanaged cluster site program into homeless shelters, and maintain six more as cluster sites for at least the next three years.

These privately-owned buildings, located in Brooklyn and the Bronx, have more than 300 apartments between them and are either partially or entirely occupied by homeless families. Rather than convert them to low-rental housing and provide residents with tenant protections, as Mayor Bill de Blasio pledged last January, DHS is planning to maintain them as family shelters (a tactic referenced in the mayor's February homelessness game plan). Advocates say this will reward negligent landlords who already benefit from the cluster program's large payouts and lax oversight.

"The city is rewarding harassing behavior," said Scott Hutchins, a member of Picture the Homeless who has been homeless himself since 2012.

There are currently 449 open violations across the eleven buildings, according to the city's shelter repair scorecard for July, 75 of which are immediately hazardous. A recent report from the Department of Investigation found the Giuliani-era cluster program to be the worst maintained in the shelter system. Yet the city has paid as much as $3,000 per month to house a single family in a cluster site apartment. When de Blasio announced his phase-out last January, the City said it was spending $125 million a year on the program.

The eleven new contracts were discussed at a thirty-minute contract hearing on Reade Street Tuesday morning, presided over by one DHS representative. They are one indicator of how the city may phase out cluster sites, which has been an open question for months.

Advocates with Picture The Homeless warn that landlords are motivated to vacate rent stabilized units in buildings that participate in the cluster site program in order to maximize profits. Evidence of this sort of harassment has been well documented.

For example, one of the buildings slated for shelter conversion is 1838 Vyse Avenue in the Bronx, which is owned by David Green, one of 13 cluster site landlords on the Public Advocate's Worst Landlord list. Gothamist has documented the conditions there, which deteriorated markedly in the early aughts. Tenants say they were pressured out and replaced by shelter residents. Intimidation tactics allegedly included locking pit bulls in empty apartments. The building is currently being operated entirely as a cluster site. From reporter Nathan Tempey:

Tenants say building managers warned them that they couldn't guarantee their safety if they stayed. In February 2013, the building's renters received a letter that read, "Please be aware that the landlord is not renewing any leases in the building, at the present time. If you would like to terminate your lease, you will not be penalized." It was signed, "The Management."

Tenant harassment has also been documented at 1387 Grand Concourse, and 3001 Briggs Avenue, both in the Bronx and slated for shelter conversion.

According to to Picture The Homeless, the new contracts are further incentive for landlords to empty out stabilized units. Data obtained by Gothamist shows that of 3,300 cluster apartments in use at one point in fiscal year 2016, 3,167 were in rent-stabilized buildings.

Advocates fear that when the shelter contracts expire, there may be little protection against landlords flipping the buildings into market rate rentals, further draining New York City's diminished stock of rent-stabilized housing.

"One of the concerns is that if they transition these eleven buildings that may have some regular rent stabilized tenants left, the owner can claim a permanent exemption from rent stabilization," said Rajiv Jaswa, a staff attorney with the Community Development Project at the Urban Justice Center. "I'm not sure if there's a mechanism to reverse that after the fact."

This spring, Mayor de Blasio pledged to phase out all cluster site apartments by 2021 rather than 2018, as originally promised. At the same time, de Blasio announced that the city must open approximately 90 new homeless shelters in order to reverse a 35-year trend of steadily increasing homelessness.

"I think the city is trying everything at the same time, but the numbers make it difficult," Jaswa said. "[They're trying to] find shelter for everyone and dealing with the staggering number of people who need shelter, and then also moving off of this cluster model that has existed for several administrations before."

The shelter contracts, he added, "may be exacerbating the housing shortage while trying to temporarily solve the problem."

The City contends that they have reduced the use of cluster sites by nearly 30 percent since early 2016, when roughly 3,600 units were occupied, and that DHS does everything they can to phase out bad actors and ensure that rent stabilized units are protected under applicable law after the contracts expire, though the enforcement for the latter falls to the Division of Housing and Community Renewal, a state-controlled agency.

"Our number one priority as we end the use of cluster sites is to help as many New Yorkers as possible transition into permanent, affordable housing while raising standards for our homeless neighbors across the board," Human Resources Administration spokesman Isaac McGinn said in a statement. "And we remain squarely focused on advancing those parallel goals through a range of aggressive strategies."

Asked to comment on how bad landlords may benefit from these city contracts, McGinn responded only that HRA considers service providers, not landlords, on their merits before awarding contracts.

HRA did not confirm how many of the more than 300 buildings in the cluster system may be converted to shelters, but stressed that these are the first. Our map of all of the units is here.

A final decision on each of the contracts discussed at this morning's meeting is forthcoming, but here are some preliminary details. (The owner of each building would receive a cut of the contract awarded to the service providers):

  • $9.89 million to Bronx Parent Housing Network to operate 3001 Briggs Avenue in the Bronx. Would expire June 2020 with an option to renew through June 2026.
  • $47.5 million to Bronx Parent Housing Network to operate 1838 Vyse Avenue, 1387 Grand Concourse, and 1237-1243 Webster Avenue in the Bronx; $11.75 million to CORE Services Group, Inc. to operate 526 Pennsylvania Avenue in Brooklyn. Would expire June 2020 with an option to renew through June 2026.
  • $29.5 million for CORE Services Group, Inc. to operate 124 Stuyvesant Avenue, 38 Cooper Street, 389 Chauncey Street, 429 Bainbridge Street, 853 Halsey Street, and 1027 Putnam Avenue in Bed-Stuy as a cluster site. Would expire in June 2020.