Newark Council Votes to Strike Controversial Law Banning Homeless Families with NYC Rent Subsidies

The voucher program, known as Special One-Time Assistance (SOTA), covers a year of rent for New Yorkers with a steady income who move out of city shelters—and usually out of NYC altogether. Newark lawmakers accused the Big Apple of outsourcing its homelessness response while squeezing New Jersey’s own affordable housing supply.

Update—June 21, 2022: Newark has officially repealed a 2019 ordinance that blocked New York City residents from relocating there with a Special One-Time Assistance (SOTA) voucher, a city-funded subsidy that covers a year of rent for people moving out of homeless shelters. The measure, known as the “Needy Persons Ban,” sought to prevent homeless New Yorkers from using the SOTA rent subsidy to lease an apartment in Newark, but faced a class action lawsuit from the Legal Aid Society and New Jersey-based firm Lowenstein Sandler LLP challenging the constitutionality of the ban.

The decision to repeal the ordinance will provide homeless New Yorkers “more opportunities to secure the housing they deserve,” said Josh Goldfein, an attorney in Legal Aid’s Homeless Rights Project.

Newark Mayor Ras Baraka’s administration declined to comment on the repeal when contacted by City Limits Monday.

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Officials in Newark, New Jersey voted Wednesday to lift a controversial ban on homeless families relocating there with a New York City-issued rent voucher, potentially unlocking new housing options as a battle over the program continues in federal court.

Facing a legal challenge, Newark’s Municipal Council agreed to strike part of a 2019 ordinance that has effectively prohibited apartment-seekers from using rent subsidies paid for by New York City. The voucher program, known as Special One-Time Assistance (SOTA), covers a year of rent for families and individuals with a steady income who move out of Department of Homeless Services (DHS) shelters—and usually out of New York City altogether.

But the program faced sharp criticism from Newark lawmakers who said the Big Apple was outsourcing its response to homelessness while squeezing New Jersey’s own affordable housing supply.

“You just can’t send people to Newark, give them a check for a year and just say you’re on your own,” Mayor Ras Baraka said in 2019. “What happens after that?”

An early iteration of the program was also marred by negligent landlords and horrible apartments that New York City approved for leasing without conducting thorough inspections.

Newark sued New York City to block the vouchers and enacted an ordinance that prohibited anyone from bringing “a needy person” to New Jersey’s largest town “for the purpose of making him or her a public charge.” Newark officials also targeted SOTA by preventing third-parties, like New York City, from paying a year of rent upfront on behalf of tenants.

New York City countersued and ended the upfront payments in 2020, but agreed to stop relocating people to Newark while the legal process unfolded.

Newark, however, faced mounting pressure to reverse the ordinance following a 2020 federal lawsuit by the Legal Aid Society and the law firm Lowenstein Sandler on behalf of tenants and voucher holders who accused the city of discriminating against them and restricting their constitutional right to travel. The Council voted to strike the “needy person” ban on Wednesday.

The bill now awaits Baraka’s signature. Baraka’s office directed questions to a city spokesperson Thursday. The spokesperson provided the text of the amended ordinance and said the city continues to pursue its lawsuit, but did not respond to a question about striking its ban on SOTA vouchers.

Newark’s First Assistant Corporation Counsel Gary Lipshutz also said the city does not plan to withdraw its lawsuit against New York.

“The lawsuit alleges that the SOTA program creates a public nuisance for the citizens of Newark. The amendment to the ordinance does not change that lawsuit,” Lipshutz said. “Ordinance or not, the lawsuit remains.”

New York City’s Department of Social Services, which oversees DHS and issues the vouchers, welcomed the vote in a statement Wednesday.

“We are glad Newark has taken the important and legally required step to remove its patently unconstitutional ban on bringing a person in need to Newark but we are disappointed that Newark is continuing to pursue its meritless lawsuit against New York City over SOTA,” said a spokesperson for the Department of Social Services (DSS), which oversees DHS. The agency did not respond to a question about whether they plan to resume moves to Newark.

Some Newark councilmembers seemed to downplay the vote Thursday. “Legal language needed to be altered,” said Councilmember John Sharpe James, adding that he continues to oppose the program.

“New York just started the program and didn’t tell anyone in New Jersey, and all of a sudden we got an influx of homeless people,” James said. “We considered it almost like dumping them here … We have our own homeless and affordability crisis over here. We can’t take on New York’s.”

An aide to Councilmember LaMonica McIver shared the amended ordinance text but directed questions about the impact of the changes to a city spokesperson.

New York introduced the SOTA program in 2017 as part of an effort to resolve ongoing, and interconnected, homelessness and affordable housing crises. To qualify for SOTA, New Yorkers must spend at least three months in a DHS shelter while earning a regular income from work or federal programs. The voucher was designed to fill a gap for shelter residents who made too much to qualify for a more common municipal rent subsidy, CityFHEPS, but who earned too little to afford an apartment in the five boroughs.

From 2017 to October 2021, more than 7,500 households moved from shelters to apartments with SOTA vouchers, City Limits reported last year. About 60 percent of them found places outside New York City, with roughly 1,200 people moving to Newark, according to court documents.

The program worked for many of those families, but also propped up bad landlords eager to accept a lump sum payment for rotting apartments without heat or legal certification. A 2019 report from the New York City Department of Investigation determined that some “SOTA families placed in housing outside of New York City were living in squalor under the roofs of unscrupulous landlords, who collected tens of thousands of dollars in rental payments upfront.”

The time-bound nature of the program also left many tenants unable to pay their rent after the subsidy expired. By the start of 2021, nearly 7 percent of recipients had re-entered the New York City shelter system during the first three years of the program—a return rate that far outpaced any other municipal subsidy over a three-year span, the Coalition for the Homeless reported.

In response to those problems, DHS eliminated the upfront payments and later enacted changes intended to ensure that apartments are safe, landlords are responsive and tenants are likely to keep their housing after their grants end. The new rules cap SOTA rents at 40 percent of a household’s income and allow some tenants at risk of eviction to receive a second, six-month grant.

“New York City has made significant improvements to the SOTA program so that it could now be useful to many people who want to move out of shelter and resume their lives in the community,” Josh Goldfein, a staff attorney with Legal Aid’s Homeless Rights Project, told City Limits in October 2021.

The rule change could clear the way for some of the 8,500 families with children in DHS shelters to find permanent housing in another city just a short PATH Train ride from Manhattan.

SOTA usage has plummeted since 2019, as local restrictions in Newark and nearby Jersey City limited housing options, and the COVID pandemic took a toll on the housing search and certification process.

Nearly 2,000 SOTA recipients secured permanent housing in the 2020 fiscal year, including 913 who moved to apartments outside New York State, according to DHS data shared with City Limits last year. That number was cut in half during the 2021 fiscal year: Fewer than 950 households secured apartments with SOTA grants from July 1, 2020 to June 30, 2021, DHS said.

Both tallies paled in comparison to the 2019 fiscal year, when 2,741 households used SOTA to rent an apartment.

DHS has declined to share data about where recipients have been renting in recent years. City Limits submitted a Freedom of Information Law request to obtain a breakdown of move locations in October 2021, but DHS has not yet provided that information.

DHS did not say how many SOTA recipients returned to city shelters in the 2021 fiscal year when asked last year. The agency instead pointed to the 2021 Mayor’s Management Report, which highlights an overall decrease in the number of households who returned to the shelter system after using a subsidy but does not differentiate between various vouchers.