Homeless residents of a Bronx shelter woke up yesterday to find that their landlord was kicking them out. "We regret to inform you that Aguila, Inc. will no longer be operating the Bronx Neighborhood Annex Shelter program," a memo from the shelter's operator says. While the memo promises "transfer information for placement in a new shelter" in the "coming weeks and months," a resident of the building told Picture the Homeless that the building's case managers were packing up boxes. "We're essentially squatters here," she said.

According to the Department of Homeless Services, there are 41 families living at 941 Intervale Avenue, and they won't be out on the street immediately.

“The provider has elected not to continue to work with DHS at this site," the agency said in a statement. "DHS will work with the provider and the landlord on a plan to ensure the safety and sheltering of these families. It’s our expectation that all parties involved will act in a responsible manner, so as not to create a stressful environment for these families.”

Sources familiar with the situation say that Aguila is balking at the mayor's plan to reduce City subsidies to shelter operators and landlords by 10%, closer to the market rate.

According to the Comptroller's Office, Aguila has received $56.1 million in contracts from the City this year and last year alone.

A 2011 audit [PDF] conducted by former Comptroller John Liu found that Aguila misappropriated as much as $10.4 million in taxpayer funding, $1.4 million of which he asked the City to immediately recoup.

A 2013 followup audit [PDF] noted that as payments to Aguila increased by 23% from 2011 to 2013, "direct payments to Aguila increased $11.7 million to $39.1 million, while direct payments to landlords and other vendors decreased by almost $1 million to $18 million."

The 2013 audit also revealed that Aguila's 40+ buildings it operates in Manhattan and the Bronx under the costly shelter system had a total of 1,565 open violations, 24% of them "hazardous." According to the DOB, 941 Intervale currently has 21 open violations. A 2013 DNAinfo report noted that 941 Intervale was roach-infested and in bad need of repair; the building caught fire and residents were forced to temporarily evacuate in December of 2012.

Robert Hess, the former DHS Commissioner under Mayor Bloomberg until 2010, was the CEO of Aguila until his death from liver cancer earlier this year. Previously he was the CEO of Housing Solutions, a group that had ties to the Poldoskys, a "notorious" real estate family and the subject of a 2013 exposé in New York Magazine for their lucrative gaming of the shelter system. In 2012 Hess organized a fundraiser for candidate Bill de Blasio.

This morning, Picture the Homeless organized a march for the residents of 941 Intervale to Aguila's offices.

"This is going to have a hugely disruptive impact on the kids and their school schedules," Heather Hamilton, a Picture the Homeless member said in a statement.

"This sense of impending doom, it's criminal," she added. "All people need stability. Having a place that you feel safe, there's nothing compared to that. The shelter system doesn't provide an ounce of that."

Aguila, Inc. did not respond to our requests for comment.

"It throws these residents' life into chaos," says Assemblymember Helen Rosenthal, who has criticized Aguila in the past. "'Weeks and months' they're supposed to hold their breath? It's so disruptive. If they're kicked out, what happens to them?"

Rosenthal added, "This whole model is wrong. It's rewarding the people who prey on the problems in the city and offer 'solutions' at sky high prices, it's unconscionable."