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The Giuliani administration's policy of denying shelter placements to homeless families has resulted in an abrupt drop of 500 families from the city's shelter system during the last two months.

According to the city's own statistics, 5,266 families were living in city shelters as of the middle of January, down from a high of nearly 5,800 in late autumn.

Operators of homeless shelters around the city are reporting increasing vacancies due to a steep drop-off in referrals from the city. And one shelter for pregnant women is in the process of converting into a singles shelter as a result of the growing client shortage.

“Something terrible is going on at the gateway to the shelter system,” said Veronica Farje, coordinator of the Emergency Alliance for Homeless Families. She reports the city's assessment centers, where families are placed after being admitted to the system, are at half-capacity. The city's census shows that the Auburn shelter in Fort Greene is barely one-third full.

Officials at the the Department of Homeless Services say they are trying to preserve an expensive resource for truly needy families, and are therefore aggressively investigating families to determine whether they can instead move to alternative living arrangements. If the city determines there may be an alternative, officials do not admit the family to the shelter system.

Advocates charge that hundreds of families have been forced to return to illegal double-ups in public housing or private apartments. Others have returned repeatedly to the EAU, only to be rejected again.

Last month, the West End Presbyterian Church on West 105th Street opened its basement to families who had refused shelter by the city. But the church closed down the effort more than a week ago for lack of resources

Following the events of last week, Steven Banks of the Legal Aid Society asked for Kenneth Feinberg, the court-appointed Special Master in a longstanding lawsuit contesting city shelter policy, to intervene. “We are preparing to return to court if this is not resolved,” Banks said.

Meanwhile, city lawyers will appear Wednesday afternoon at the Supreme Court Appellate Division, 60 Center Street, to contest a court mandate requiring the city to move people sleeping on the chairs and floors of the EAU to a shelter bed within 48 hours.

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