CityFHEPS Voucher Holders & Legal Aid Sue to Preserve Landlord Incentive

After the city suddenly cancelled an incentive for landlords to hold units for families with vouchers—covering one month’s rent while the subsidy application is processed—families in shelter and legal groups won a temporary court order to keep it alive.

On July 13, the Montanez family will mark a somber anniversary. Milagro Montanez, her husband, and her high-school aged daughter will have been living in a homeless shelter in Park Slope, Brooklyn for two years.

They are three of the 130,000 people living in New York City’s shelters. “People like us just want an apartment. That’s all we want,” said Montanez.

The good news: they have a city-issued housing voucher. The bad news: it’s been really hard to use.

Between discrimination against voucher holders, a tight housing market, and a frustrating application process, it can take months to find an apartment with a CityFHEPS voucher, plus more time for the city to process an application.

As City Limits first reported, the city eliminated a provision intended to make the process smoother in late May. For leases starting before July 1 of this year, the city would pay landlords one month’s rent to hold the unit while it inspected the premises and processed the application. New leases would no longer get the payment.

Landlords, brokers, lawyers, and tenants told City Limits that eliminating the payment would make it harder for landlords to take vouchers.

The Legal Aid Society sued last week. The group argued that, in terminating the incentive with little notice and no opportunity for public comment, the Department of Social Services (DSS) violated the city’s administrative rules and procedures.

The decision “lacked any stated rationale and will cause homeless individuals and families to spend additional months in shelter, at substantially increased costs to the City itself,” the lawsuit read.

Friday, Judge Lyle L. Frank issued a temporary restraining order that prohibits the city from ending the unit hold incentive until he can review the merits of the case.

“The city provided absolutely no rationale for this decision, which rescinds a long standing, extremely successful policy,” said Pavita Krishnaswamy, supervising attorney at the Legal Aid Society who is arguing the case in court. 

Both DSS and the New York City Law Department declined to comment on the ongoing litigation.

Earlier this month, a DSS spokesperson told City Limits that the incentive, which has been in operation since at least 2019, was always going to be temporary. They added that it was being terminated as part of a cost-cutting budget plan as the city rolled out a new application data system that it hoped would cut processing times.

It comes as the city weighs other changes aimed at reining in CityFHEPS spending (including a proposed rent hike for a subset of CityFHEPS voucher holders renewing for their sixth year and beyond). The program’s budget has ballooned in recent years, from $253 million in fiscal year 2021 to $1.25 billion in fiscal year 2025.

It also serves more people than ever, with 55,000 households enrolled. A record 10,200 households moved out of shelter with CityFHEPS in fiscal year 2024, up 56 percent from the prior year, according to DSS.* But advocates say ending the unit hold incentive could jeopardize that.

“On my desk right now I have more lost apartments and more people in protracted move-ins than ever before. So this was a very inopportune and inconvenient and horrible, even tragic time to take away the unit hold incentive,” added Stephanie Rudolph, a lawyer who works with housing voucher holders at Legal Aid.

In March, the Montanez family found an apartment in Midtown that would rent to them. But they’ve been stuck in the application process since.

“Now I’m scared that I’m gonna lose this apartment, because it’s already been five months,” said Montanez.

A frustrating application process

Montanez is an assistant teacher and her husband works at Amazon. They make around $4,000 a month—not enough to afford an apartment in the city and feed their family without help.

CityFHEPS vouchers require families to pay 30 percent of their income toward rent. The city picks up the rest. But that calculation gets complicated when low-income families like the Montanezes work multiple jobs with variable hours.

Sometimes a teacher is out and Montanez works more. Some days work at the Amazon warehouse is slow. Other days her husband gets 12-hour shifts. “Nobody works a job that is steadily an even number every single time. A check goes up, a check goes down,” said Montanez.

Each time a family’s income changes, the city needs to recalculate the tenant contribution and issue a new shopping letter (a document that lets them search for an apartment with the promise of a voucher).

Reprocessing applications can delay move-ins and frustrate landlords and tenants alike. Rebudgeting has lost Montanez’s family six apartments in the two years she’s been looking, she says. “How many times do we have to get re-budgeted just to get approved for this?” asked Montanez.

She found landlords willing to take their voucher in New Lots in East New York, by Church Avenue’s G stop, and on President Street in Brooklyn, but lost them all.

“That [President Street apartment] really hurt that because the landlord was so sweet with us. He was like, ‘I want you people to be here,'” Montanez said. But delays with the family’s voucher application meant he’d be forgoing months of rent.

“He tried his best to hold it,” said Montanez. “He’s not going to hold an apartment for months without rent. That’s not being money hungry. It’s called common sense.”

While still variable, DSS told City Limits the average processing time was about three weeks. A report from State Comptroller Thomas Dinapoli found cases where it took up to 10 months (DSS has disputed the findings of the report).

“[Department of Homeless Services] approves the CityFHEPS, [Human Resources Administration] sends the checks. So how is it that you’re not working together?” asked Montanez. “Please make it make sense.”

DSS, which oversees both DHS and HRA, says that new data systems will help reduce the time it takes to process a voucher application. The spokesperson said that 90 percent of applications were being processed by the new system, called CurRent.

“We are not seeing the improvements that they are claiming,” said Krishnaswamy.

Lawyers who work with tenants on voucher applications were skeptical of the city’s stated reasons for cutting the program.

“It’s frankly absurd,” said Rudolph. “This claim that the unit hold incentive is somehow not going to become necessary because they have become so efficient.”

Sticks and carrots

Some brokers and landlords are also concerned about the simultaneous loss of the unit hold incentive with the implementation of the FARE act, new legislation that requires whoever hires the broker to pay the broker’s fee.

Previously, when a landlord hired a broker and accepted a tenant with a CityFHEPS voucher, the city would pay half the broker’s fee (if there was one). Since low income tenants can’t afford to hire brokers themselves, the loss of city contributions to broker fees could be another expense that potentially discourages landlords from participating in the program.

The city did not respond by the time of publication to whether or not it will continue to contribute to broker’s fees for apartments leased with CityFHEPS.

The FARE act took aim at brokers who would collect large fees from incoming tenants without doing much work: sometimes asking for thousands of dollars just for opening the door to show an apartment.

But unlike leasing to market-rate tenants, brokers working with a voucher must coordinate with city agencies, housing specialists, and tenants, sometimes for months, to get approved for the program.

“They’re doing a lot of work and should be paid for it, in my opinion,” said Rudolph.

Landlords have to wait for the city to process applications, and submit the apartment to an inspection. Sometimes that requires forgoing months of rent from a cash tenant. 

But, once complete, a voucher is guaranteed rent. And until recently, owners and brokers would get a hold incentive or collect a fee.

“I think we need to balance the sticks and the carrots,” said Rudolph.

Searching for housing with a voucher is already taxing.

“I can’t even look for a job because I’m constantly [looking for apartments],” said Montanez.

The vouchers only pay so much—$2,782 for a family of three searching for a two-bedroom in 2024—making it hard to access certain neighborhoods. A February City Limits investigation found that voucher holders were concentrated in just a few parts of the five boroughs: The Bronx had 46 percent of CityFHEPS vouchers, but just 10 percent of the city’s population.

Housing specialists (social workers who help people in shelters find apartments with vouchers) suggested units in the Bronx or Queens, Montanez said. But she wanted Brooklyn.

“I want to be where my family and I are able to commute to work, my daughter’s school, things like that. If I want that then I have to look on my own,” she said.

Rudolph thinks financial incentives for landlords gave voucher holders more options.

“In certain neighborhoods brokers rarely get 15 percent of the annualized rent as a broker fee,” Rudolph said. A competitive edge for voucher holders can help level the playing field. “It really does motivate certain brokers and landlords to work together to get people with programs.”

Judge Frank’s order extends the unit hold incentive through at least Aug. 6, when he scheduled another court appearance. 

For now, it provides some relief for voucher holders and lawyers for whom the loss of the hold incentive threatened negotiations with landlords leasing for July or August.

Lawyers for Legal Aid are optimistic that Judge Frank will see the importance of the issue for getting homeless New Yorkers housed in a time of crisis.

“An agency doesn’t get to engage in this kind of action with absolutely no reason provided then ex post facto or after the fact say to you, to the media, or to anybody else, ‘Oh, this was actually our rationale,'” said Krishnaswamy.

Montanez hopes that if the incentive persists, it will make their prospective landlord more likely to keep holding their apartment for them.

“We’re good people. We work hard, we pay taxes, and we’re still getting the short end of the stick,” she said.

*This story was updated to include additional information about CityFHEPS’ budget.

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