Brothers Stuart and Jay Podolsky—long known for profiting off of poorly-maintained housing, and who are recent clients of Adams’ Chief of Staff Frank Carone—are leasing at least three of their hotels to the city for use as shelters for homeless families.

With the number of families in homeless shelters on the rise, New York City officials have once again turned to a pair of notorious landlords closely aligned with Mayor Eric Adams’ top aide to secure extra bed space.

Brothers Stuart and Jay Podolsky—known for profiting off of poorly-maintained housing, and recent clients of Adams’ Chief of Staff Frank Carone—are leasing at least three of their hotels to the city for use as shelters for homeless families. The sites include the Marcel in Gramercy, which reopened to homeless families earlier this month; the Apollo in Harlem, where staff said families began staying July 2; and the Ellington in Morningside Heights, where work crews began prepping for the return of homeless residents in June after the city moved families out a year earlier.

Despite the Podolskys’ sordid pasts, city officials have long leased hotels and tenement buildings from the brothers for use as temporary homeless shelters. In 2017, the property owners retained Carone, then a partner in the law firm Abrams Fensterman, to represent them in negotiations with the de Blasio administration that led to the sale two years later of 17 buildings housing homeless families in the city’s scandal-scarred “cluster site” program. Under that scheme, the Department of Homeless Services (DHS) placed families on a temporary basis in privately-owned apartments they leased at exorbitant prices. The Podolskys managed to extract $173 million from the city in the portfolio sale—$30 million more than the value assessed by an independent appraiser—after raking in millions from the cluster rentals.

Among advocates for the rights of homeless New Yorkers, the deal was seen as a key step toward finally eliminating the cluster site program that stuck families in miserable—at times fatal—conditions overseen by notoriously neglectful landlords. In the case of the Podolskys, the problems extended beyond neglect: the brothers have been convicted of harassing low-income renters in a campaign of “terror,” prosecutors said, and accused in 2019 of cheating on their taxes while renting apartments to the city.

Still, they managed to cash out with Carone—at the time, attorney for the Brooklyn Democratic Party and a key bundler for then-Mayor Bill de Blasio—at the center of the agreement.

In his first six months as Adams’ gatekeeper, Carone has faced several accusations of influence-peddling and scrutiny of his business ties. But City Hall spokesperson Fabien Levy said Carone had no hand in the latest Podolsky deals and that he sought to avoid conflicts of interest with the Department of Social Services (DSS) when he was appointed to the government post.

“He was not a part of the decision-making process of choosing this site as a shelter,” Levy said. “In fact, months ago, he proactively asked DSS’s general counsel to create a list of matters that he may have worked on or touched on in his capacity as an attorney prior to his joining this administration so that we could properly note and recuse himself from participation in any decision-making or discussion. As such, this matter was never even brought to Frank.”

City Limits submitted a Freedom of Information Law request for the shelter contracts to see how much the Podolskys are getting paid and how many Podolsky hotels are used to house homeless New Yorkers. City-contracted nonprofits rent rooms in at least two others, the Longacre and the ParkView, for homeless adults.

City Hall’s assurances have yet to assuage good government experts, who raised concerns about the latest deal with the Podolskys when contacted by City Limits. Reinvent Albany Executive Director John Kaehny said the agreements illustrate deeper problems with the way social service business gets done in New York City.

“It’s such a rich broth of conflicts of interest with all these powerful people in the city,” Kaehny said. He also criticized the Podolskys’ history of past criminal activity and allegations of tenant harassment.

“The Podolskys are a concern because of more than just their connection with Frank Carone. They seem to be not very good landlords or to be not very good vendors,” Kaehny said. “This far into being a social welfare state, we don’t have better options?”

The Podolskys, who did not respond to phone calls and texts for this story, are nevertheless capable of freeing up bed space at a moment’s notice—a key relief valve for a shelter system strained by the end of statewide eviction protections. New York City’s unique right-to-shelter mandate forces officials to find temporary accommodations to meet their legal obligations, an arrangement that led to the cluster program and the use of hotels for families with kids as well as the continued reliance on massive shelters for single adults.

“We typically see an increase in our shelter population during the summer months and to continue fulfilling our legal and moral mandate to provide shelter to everyone who needs it, we have temporarily re-opened some sites that we have used as shelter in the past,” a DHS spokesperson said.

The number of families in the DHS shelter system has jumped by about 1,000 over the past six months—from 8,455 on Jan. 2 to 9,400 on July 14—according to the most recently available data tracked each day by City Limits. The overall DHS shelter population has risen to just over 50,000 people compared to 46,591 on Jan. 2, City Limits’ tracker shows. At the same time, evictions in New York City have increased since the end of statewide protections and rents have continued to rise. More than 60,000 people stay in city-run homeless shelters, including those administered by other agencies, each month.

Moving more families into permanent housing would be the most efficient and productive solution to the capacity challenge, but that has proven difficult. Though the population dropped last year, the length of time that families with children stay in shelter has only increased—the result of administrative barriers, a tight housing market, discrimination against people with rental assistance vouchers, and staff shortages in city government and nonprofit agencies.

The hotels are hosting homeless families just seven months after city officials celebrated moving children out of all commercial facilities, which lack kitchens. The DHS shelter census had decreased to around 45,000 people, allowing officials to instead place families in so-called Tier II shelters, which resemble apartments and have on-site social services. When City Limits reported on the decision to move families out of the Ellington in June 2021, an agency spokesperson said the exit was part of the mission to end “stop-gap, quick fix” accommodations for families.

The Ellington is not an ideal setting for children, according to families who have stayed there. The hotel features cramped studios where parents and their children share bunk beds without air conditioning, residents told City Limits last year. A Morningside Heights resident who lives near the hotel sent City Limits photos of unopened box fans stacked in the lobby in June.

Inside the lobby of the Apollo on Friday afternoon, a lone microwave sat on a table in front of an empty vending machine. Two security guards sat in chairs near the door. Two residents who spoke with City Limits outside the building said they had arrived over the past seven days and found the place safe and clean, though there was no air conditioning in the rooms.

One mother with an infant said she had a hot plate in her room to prepare food. She said she was assigned to the Apollo a week earlier after family forced her out of the home she was sharing. The shelter layover “was just temporary for when life gives you an unfortunate event,” said the woman, who declined to provide her name because she did not want people to know where she was staying.

At the Marcel Thursday afternoon, 12 packaged cribs were stacked in the lobby as workers moved modernist furniture out of the building and into cars or the basement. There was no security present on-site Thursday or Friday, though families had moved into dozens of rooms, according to staff and residents. The 11-floor building does not appear to have a current certificate of occupancy.

A woman named who stood outside with her two young children, said she had arrived two days earlier after first visiting the family intake shelter in The Bronx. “It’s actually clean and comfortable,” she said in Spanish, adding that the rooms have air conditioning.

Services at the Apollo and the Ellington are provided by Children’s Rescue Fund (CRF)-Icahn House, an organization founded by billionaire Carl Icahn. CRF did not respond to emails seeking comment Friday. The politically connected organization Acacia Network—one of nine nonprofits on DSS’s internal “watch list” of groups with financial management concerns—provides services at the Marcel, but directed questions to DSS.

New York City is under a court order to provide shelter to families, at least for 10 days as DHS officials investigate their eligibility. Family shelter denials surged last year and the city has stopped publicly reporting the acceptance rate.

Yet, the available data shows that more families are entering shelters, leaving the city in a tight spot, said Legal Aid Society attorney Josh Goldfein, who represents people experiencing homelessness in ongoing right-to-shelter litigation.

“The city has a serious problem in that their shelter capacity, particularly for families with children, is extremely tight right now and if they can’t add shelter units they’re not going to be able to meet their legal obligations,” Goldfein said.

He attributed the increase to the end of the eviction moratorium—which had helped drive down the number of families entering the shelter system from March 2020 until it ended in January of this year—and a lack of capacity for lawyers representing low-income tenants in eviction cases under the city’s right-to-counsel law.

Goldfein also blamed “irresponsible NIMBY efforts” to block every new shelter in the city. Last week, two Bronx lawmakers held a rally to oppose a men’s shelter in North Riverdale. In May, the city nixed plans to open two shelters in Chinatown after facing local resistance and contending with a union dispute. In March, the city pulled the plug on a proposed shelter in Morris Park.

“Our clients are entitled to decent, safe shelter space that’s accessible to people with disabilities,” Goldfein said. “If the city has no choice but to get those units from these notorious operators, then we are going to be monitoring very closely to make sure that at a minimum they provide shelter units that are safe and accessible.”

Additional reporting by Daniel Parra