Rent Stabilization

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Residents of the pricey high rises of Battery Park have a powerful experience in common with those in the tenements of the Lower East Side: Both witnessed firsthand the destruction of the World Trade Center on September 11, 2001. But when it comes to a government grant program that has helped pay the rent since then, lower Manhattan is as clearly split as ever into two different worlds.

The Lower Manhattan Development Corporation–the agency created in the aftermath of the attacks to help revive lower Manhattan–set aside $280.5 million in a grant program to encourage the residents of lower Manhattan not to leave, and to draw new residents to an area that saw vacancy rates shoot up to 25 percent after the attacks (and to 60 percent or more in some large buildings).

From August of last year until this past June, the LMDC accepted applications from residents living around the World Trade Center, in Tribeca and below Delancey Street on the Lower East Side. More than 80 percent of the 47,554 eligible households in lower Manhattan submitted applications. Over 30,000 have been approved, and more than $160 million granted. The LMDC is still processing thousands of additional applications.

Since the program started, the area’s housing market has recovered impressively. Vacancy rates in lower Manhattan–variously defined as the area below Chambers, Canal, Delancey or Houston Streets–have dropped substantially. Today, the neighborhood, at less than 5 percent vacancy, is more populated than the rest of the island, at 9 percent. And the area has not seen rents go down nearly as much as they have elsewhere in Manhattan.

Real estate brokers say the federal funding helped bring those numbers up. “The grants really attracted people to come to the neighborhood,” says Yuval Greenblatt, manager of the rental department at real estate broker Insignia Douglas Elliman. In the area closest to the Trade Center site–south of Chambers Street and west of Nassau–eligible residents receive 30 percent of their monthly rent or mortgage, up to a total of $12,000 over two years. South of Canal, residents receive up to $6,000.

The dollars also appear to be keeping rents artificially high. The Real Estate Board of New York reports that prices are about 95 percent of what they were prior to 9/11–and might be even higher were it not for the LMDC’s cap on rents at that precise level. Elsewhere in Manhattan, rents are 15 to 22 percent off their peaks. Greenblatt acknowledges that the grants may be affecting housing prices. “Without that,” he points out, “someone would have to make up that gap. Either tenants would have to pay that money or owners would have to reduce rents.”

Some observers call the grants an outright giveaway to property owners. “It’s really just a pass-through to the landlords,” says an aide to one local elected official. “If the true market had gone down, the exact same [number of] people would have come in because the rent would have been lower. It’s a huge waste of money.”

The LMDC disagrees, of course. Asked whether it props up rents, Amy Peterson, the LMDC vice president who manages the program, says, “I don’t know if that’s true. But I think the added incentive for people to move downtown brought people back to the neighborhood, and stabilized the market.”

Frank Braconi, executive director of the Citizens Housing and Planning Council, a nonprofit research group, cautions against giving the grants too much credit. Housing subsidies, he says, normally sway only a small fraction of the housing market: residents who have already decided to move but who are weighing one neighborhood against another. “I question what it’s accomplishing,” Braconi says. “I would be very surprised if [the LMDC program] had played a big role in the location or relocation decisions of many of the existing residents” in lower Manhattan. “I think for the most part people were either going to leave or they weren’t, and the subsidies played very little part in that.”


Residents of the Lower East Side south of Delancey are also eligible for grants–much smaller ones. There’s a one-time $1,000 “September 11 grant” for ongoing residents of lower Manhattan, and a “family grant” of up to $1,500 for residents with children.

These households are strikingly different from the ones getting two-year grants. In the zone where residents are eligible for $12,000 grants, 77 percent of households have incomes above $50,000 a year, according to the 2000 Census. In the $6,000 zone, 45 percent do. Between Canal and Delancey, just 25 percent earn more than that.

The LMDC has declined to release figures showing the distribution of grant money across lower Manhattan. But Hyeon-Ju Rho of the Urban Justice Center is determined to see them. Rho has heard numerous reports from other advocacy groups that low-income residents have had difficulties applying for the benefits, particularly because of lack of documentation. Many Lower East Side residents, for one thing, don’t have leases. LMDC has a policy of ensuring that no resident is denied aid on the basis of inadequate documentation, but it’s unclear how successfully it has been carried out in the field.

“The real question is, what percentage of eligible units actually applied and were approved in each of the zones, and what percentage of the total money available was approved and has been disbursed?” Rho says. Her organization has filed an extensive Freedom of Information Act request seeking that data.

Poor residents of lower Manhattan have had another problem taking advantage of the LMDC grants: Public assistance agencies are erroneously counting them as income, demanding that recipients of other public benefits, like welfare and disability, reimburse the agencies for all or part of the grant amounts. Elaine Hoffman, a mother of two who lives on Supplemental Security Income, applied for and received all three grants under the LMDC program. “Then all of a sudden,” she says, “we find out Social Security wants to be reimbursed.”

That’s not supposed to happen. The federal Stafford Act states that funding for recovery from a national disaster is not to be treated as income; it shouldn’t affect disability checks or welfare benefits. Yet a number of low-income residents have reported losing or being threatened with losing public aid after getting rent subsidies.

The bureaucracies’ confusion about the grant program “could jeopardize their SSI payments, food stamps, public assistance and housing, Medicaid. It’s like a domino effect,” says Phil Craft, an aide to Congresswoman Carolyn Maloney. Anyone familiar with these programs knows how difficult they can be to stop, start and navigate in general. “These are people who are barely able to pay their bills every month,” Craft says. “There’s just no room for error.” Maloney’s office has been working with the government agencies, with varying levels of success.

Peterson says the LMDC has notified federal agencies of the grant program but can’t do more to ensure poor residents get all the benefits they’re entitled to. “We’re not privy to the list of people who get benefits from different agencies,” she says. The city’s Human Resources Administration and Housing Authority have both been responsive, she says, with HRA issuing a mailing advising recipients of their right to receive benefits without penalty.

Advocates working with aid recipients feel compelled to point out that the housing grants are originating through the federal Community Development Block Grant program, under which 70 percent of aid must go to low- and moderate-income people. Following 9/11, New York received a special appropriation along with a waiver allowing the block grant dollars to be spent regardless of beneficiaries’ income levels. “Suffering isn’t determined by whether you were rich or poor,” says Peggy Earisman, interim project director at Legal Services of New York’s Manhattan office. “That this CDBG money is going to assist fairly wealthy people and somehow it’s not going to benefit poor people–it’s just not equitable.”

Mark Wallace is a freelance writer based in New York City.

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