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De Blasio's Department Of Homeless Services Can't Fully Explain High Costs Of New Park Slope Shelters

The city is set to pay $261 million over nine years to operate two new buildings on 4th Avenue and 15th Street in Park Slope as family homeless shelters
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The city is set to pay $261 million over nine years to operate two new buildings on 4th Avenue and 15th Street in Park Slope as family homeless shelters Gothamist / Neil deMause

As Park Slope residents debate the scheduled arrival of two new homeless shelters in their neighborhood later this year, another question has arisen: Is the city overpaying to provide the homeless families who will live there with shelter and services? According to contracts released last month, the city will be spending more than $260 million over nearly nine years to house 253 families at the two newly constructed buildings on Fourth Avenue—a cost of about $10,000 a month per apartment.

In response, the city has provided Gothamist with a breakdown of how much public money will go toward rent, and how much will go toward operational costs and social services at the facilities, which will be run by the social service agency Women In Need. “High-quality transitional housing is far more than just a room to sleep in or a roof over one’s head,” the city’s Department of Homeless Services said in a statement.

What the city has struggled to explain, however, is why the new shelters will apparently cost so much more than similar family shelters operated by the same organization elsewhere in Brooklyn.

It’s not just because rent is higher in Park Slope. On average, according to the breakdown DHS provided to Gothamist, the city will pay $3,500 per unit per month in rent at 535 4th Avenue starting in September and $3,666 per unit per month at 555 4th Avenue starting in December, for a mix of one-, two-, and three-bedroom apartments. That leaves more than $6,000 per unit per month, on average, that will be spent operating the shelters and providing social services.

By comparison, the city pays Women In Need just $2,998 per unit per month for these expenses at its family shelters on Junius Street in Brownsville. If the city were paying the same rate for services and operations at the Fourth Avenue shelters, it would result in a savings of about $87.6 million over the course of the nearly nine-year contracts WIN is being awarded to run the new shelters.

DHS has attempted to explain the disparity by breaking down spending on services, security, and rent at the shelters, which are projected to total $6.7 million, $2.8 million and $10.9 million a year, respectively. But these figures don’t add up to the total contract amounts that were announced earlier, which came to about $30 million per year, a difference of more than $9 million a year. Asked about the disparity, DHS noted that negotiations are ongoing and the final contracts could be valued at less than the $261 million total originally announced.

The initial contract value “represents our uppermost estimate for what a provider will need to effectively operate a high-quality borough-based shelter, with generous estimates helping guarantee we have set aside more than enough to meet our shared mission,” DHS said.

The cost disparity initially came to light after Fourth Avenue Neighbors, a group of Park Slope residents opposed to the new shelters, obtained the contracts for the Junius Street shelters through a Freedom of Information Law request.

“This could very well be enriching a lot of people inappropriately,” said Daniel Price, a member of Fourth Avenue Neighbors. “We don’t yet know who it’s enriching.”

WIN has been helmed by former City Council Speaker Christine Quinn since 2015, but the organization has long been one of the city’s major providers of services to homeless women and children. The nonprofit, which had $86.3 million in revenue in fiscal year 2018, houses more than 1,200 families each night—about 10 percent of the homeless families in the city—in 11 shelters across Brooklyn, the Bronx, Queens, and Manhattan. It also provides 335 units of supportive housing, a subsidized permanent housing option that comes with social services. WIN helped 740 families transition from shelters to permanent housing last year, according to its annual report.

The nonprofit indicated that at the new shelters in Park Slope, families will get on-site child care and after-school programming, as well as case management and assistance accessing health care, education/job training, employment, and permanent housing. (WIN didn’t say whether the exact same programming is offered at the Junius Street facilities, but the budgets in the contracts for those buildings include line items for child care, recreation, and counseling.) According to DHS, while the cost of security, rent, and other variables may differ between shelter sites, the daily cost of providing social services to shelter residents will end up being very similar once negotiations are finalized.

Fourth Avenue Neighbors has also raised the question of whether the city agreed to pay developers Slate Property Group and Adam America Real Estate above market rate for rent at the two new buildings, which were originally designed to be market-rate rental units. When determining market rate, Gothamist previously cited a City Realty article that placed the overall median rent for Park Slope at $2,814 per month. However, a recent search on that site for two-bedroom apartments currently available for rent in Park Slope and Gowanus shows the median rent for those units is $3,400, placing it in line with what the city is paying.

According to DHS, the average cost of providing shelter to a family with children is $190 per day. That includes the cost of housing families in purpose-built shelters like the ones WIN will operate, as well as the cluster sites and hotel shelters the city is trying to phase out. DHS views the hotel shelters as far less cost effective, noting that if they were excluded from the calculations, the average cost would drop to between $150 and $175 per day.

“There are services provided in hotel shelters, but are they as robust as what we’re able to do in traditional shelters? No,” said DHS spokesperson Isaac McGinn.

Still, McGinn couldn’t pinpoint why some “traditional shelters” cost so much more to operate than others. Housing a family in the shelter coming to 555 Fourth Ave. in Park Slope will cost about $347 per day, well above the average rate. Even with the lower rates DHS says it is negotiating, the daily cost per family would still come to about $253.

This isn’t the first time the city has been called out for a lack of consistency in its shelter rates and lack of transparency in how it determines what’s reasonable to pay. A state comptroller’s audit that analyzed 40 shelter contracts awarded by DHS in fiscal year 2016 found that in several cases, the city was paying shelter providers at per-day rates that exceeded those set by the department’s own guidelines, and that there were sometimes significant variances in the rates awarded for shelters serving similar populations.

“For example, two comparable adult shelters in Brooklyn with similar capacities...had rates that differed by 218 percent,” the report found. The comptroller added that DHS didn’t always maintain sufficient evidence of its negotiations or documentation justifying the contract amounts awarded.

As recounted in the audit, DHS responded that it was in the midst of overhauling its organizational structure and contracting procedures. The department also noted in its response to the audit that in July 2017 it started using a new budget modeling tool to facilitate contract negotiations and rate setting and improve consistency across contracts.

Yet, DHS still has to negotiate with the operator and landlord of each shelter on a case-by-case basis and is under pressure to fulfill its legal obligation to provide a bed to every New Yorker who needs one. The city has committed to opening 90 new shelters as part of its “Turning the Tide on Homelessness” initiative to reduce the city’s homeless population.

At a public hearing on the Park Slope shelter contracts on June 27, Fourth Avenue Neighbors argued that with all the money the city is spending on the new shelters, it could instead turn the buildings into permanent, affordable housing for homeless families. Price said in his testimony at the hearing that Quinn had tried to “paint my community as unwelcoming to our neighbors who have experienced homelessness,” which he called “a reprehensible and hypocritical slander, given our strong support for deeply affordable housing at this exact location.”

But shelters serve a different purpose than permanent housing and the city needs both, Giselle Routhier, policy director at Coalition for the Homeless, told Gothamist.

“For sure it’s really good to channel energy and advocacy into getting the city to build permanent housing,” said Routhier, noting that Coalition for the Homeless has a campaign underway to get the city to do just that. “But we still have to meet people’s immediate needs.”

While the lack of permanent affordable housing undoubtedly contributes to the homeless crisis, there are many reasons individuals and families may need immediate shelter placement, including domestic violence, eviction, or getting kicked out by a family member, said Routhier. On a single day last week, 144 families requested temporary housing at the city’s Prevention Assistance and Temporary Housing intake center in the Bronx, according to city data.

Other Park Slope residents, meanwhile, have advocated for the shelters. A petition created in support of the shelters had garnered more than 3,000 signatures as of Monday morning, more than twice as many as a petition to oppose them.

Helen Ho, a Park Slope resident who spoke in favor of the shelters at the contract hearing last month, said she understood the need for emergency housing because she had experienced housing instability after escaping an abusive father as a child. She added that opening the shelters doesn’t preclude the creation of more affordable housing. “I suggest we all get together after this and organize for more affordable housing in our neighborhood,” she urged her neighbors.

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