Since July 1, the city has paid CORE nearly $3 million to operate five shelters that provide two-year stays for young people experiencing homelessness. The troubled nonprofit operates 99 beds for teens and young adults in Brooklyn and The Bronx.

Benjamin Kanter/Mayoral Photo Office.

Mayor de Blasio in 2018, at a hearing for legislation to improve shelter access for runaway and homeless youth.

New York City’s youth development agency is terminating its shelter contracts with the nonprofit CORE Services following reports of exorbitant compensation and lucrative self-dealing by the group’s CEO, officials said Thursday.

The move to cut CORE out of the Department of Youth and Community Development (DYCD) shelter system comes after Mayor Bill de Blasio announced last month that the city would no longer do business with the organization. Advocates say the decision poses several challenges specific to housing homeless teens and young adults, including a relatively small stable of reliable youth shelter providers and a state law requiring providers to receive location-based certification.

“Without an appropriate and timely plan to reallocate their 99 DYCD-contracted youth shelter beds, the youth that are currently under their care will suffer,” said Coalition for Homeless Youth Executive Director Jamie Powlovich. “We hope that the needs of the youth will be prioritized during this unfortunate situation.”

CORE is not a member of the Coalition for Homeless Youth, an advocacy organization, but the embattled nonprofit has expanded its role in the youth shelter sector in recent years.

Since July 1, DYCD has paid CORE nearly $3 million to operate five Transitional Independent Living (TIL) shelters that provide two-year stays for young people experiencing homelessness, known as runaway and homeless youth, or RHY. CORE operates 84 beds for teens and young adults between 16 and 20 across four of its shelters, one in Brooklyn and three in The Bronx.

The organization also operates another Brooklyn shelter with 15 TIL beds for young adults aged 21 to 25—a quarter of the 60 beds for older RHY that the city established last year.

The city counted 6,753 runaway and homeless youth last year—a number that advocates consider a significant undercount—but youth-specific shelter, housing and services can be hard to come by. New York City agencies have worked with nonprofits to expand the youth shelter network under de Blasio, but many young adults are still forced to enter the Department of Homeless Services (DHS) system or find other unstable housing.

Recent investigations by the New York Times and New York Post revealed that CORE CEO Jack Brown earns $1 million a year running the homeless service provider while using city funds to pay for-profit vendors that he owns. In the wake of those reports, de Blasio and DHS said they would no longer contract with CORE, which has received $68.1 million from the city during the current fiscal year, mostly from DHS shelters for single adults and families with children.

“We’re talking about people in need, folks who are homeless, and this organization took advantage of those people, and they will no longer be doing business with the City of New York,” de Blasio said at a Nov. 23 press conference.

Advocates for homeless young people questioned whether that directive also applied to CORE’s five DYCD shelters.

A spokesperson for de Blasio said Thursday that it did. “The mayor meant what he said—the city is ending all contracts with CORE Services,” said spokesperson Laura Feyer.

DYCD and the mayor’s office would not elaborate on how or when they will end CORE’s youth shelter contracts. CORE took in $5 million from DYCD in fiscal year 2021, a fraction of the roughly $103 million the organization got from DHS during that time period, according to the city comptroller’s contract database.

DYCD spokesperson Mark Zustovich declined to answer specific questions about the CORE contracts and instead referred to a statement he provided City Limits.

“In light of the city’s recent challenges with the organization, DYCD is reviewing its contracts and determining how to best maintain services for young people in need,” his statement read.

DHS has told CORE that they plan to end all of the organization’s contracts to provide services at shelters or commercial hotels by March 31, 2022, according to a letter shared with City Limits.

But transferring CORE’s five DYCD shelters to another organization may take longer to accomplish. RHY shelter providers must receive site-specific certification from the state’s Office of Children and Family Services (OCFS) in order to serve young people, making it harder for one nonprofit to quickly step in and run a shelter if another loses or withdraws from its agreement with DYCD.

OCFS spokesperson Jeannine Smith said the agency would not “speculate” on the future of the agreements between DYCD and CORE but provided a statement saying they would assist with the search for another provider.

“If the city chooses to re-assign the contract to a different provider, OCFS would work closely with the provider and DYCD to support a seamless transition and to ensure continued and consistent care of the youth,” she said.

When contacted for this story, CORE officials said they had not spoken with DYCD about the contract review and did not know that the city planned to terminate their agreements. A CORE spokesperson said the organization would comply with any review.

“CORE remains committed to our long-standing and successful partnership with DYCD,” the spokesperson said. “We intend to continue providing the highest level of care to our resilient runaway and homeless youth and young adults, as they progress towards independence.”

The organization also maintains that they were the ones who decided to pull out of the DHS shelter contracts with the city following the reports by the Times and Post, stating in a Nov. 19 letter to DHS administrators that they were owed more than $30 million and wanted out.

DHS fired back at CORE in a Nov. 22 letter saying the organization failed to meet steps outlined in a corrective action plan, including requirements to refund $2.3 million in “excessive executive compensation” and fold Brown’s for-profit vendors into the non-profit structure.

“Rather than agree to these terms, CORE decided to abandon its contractual obligations,” DHS Attorney Martha Calhoun wrote to the organization.